Giving generous debt relief terms to poorest and most indebted countries

Particular attention should be paid to the resource needs of low-income countries with substantial debt burdens which continue, at great cost, to service their debt and safeguard their credit-worthiness.

Debt problems are a serious obstacle to the pursuit of economic and social development. High debt-servicing burdens deprive debtor developing countries of the resources needed to build a competitive basis for economic development and to develop a strong social and physical infrastructure. Debt problems of poor countries have become deeper in the aftermath of the global financial crisis. In parallel, middle-income countries which have access to international capital markets have been repeatedly hit by financial crises.

Debt relief should form part of a comprehensive framework which would ensure that debtor countries do not fall back into arrears by eliminating the structural causes of indebtedness. Creditor nations must now give the poorest members of the world community a new start. The initiative taken at the Cologne Summit to provide faster, deeper and broader debt relief for the poorest countries is highly encouraging.

This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities.

Creditor nations must now give the poorest members of the world community a new start. The initiative taken by the G-7 countries in Cologne to provide faster, deeper and broader debt relief for the poorest countries is highly encouraging. The enhancements of the HIPC Initiative, which were proposed at the Cologne Summit and subsequently endorsed at the IMF/World Bank meeting in September 1999, will link debt relief with poverty alleviation and allow debtor countries to target budgetary savings to social expenditures. The G-7 has called upon all bilateral creditors to forgive all concessional debt owed by qualified HIPC countries.