UNGA:2-C INSTRUCTIONS TO JOIN CONSENSUS ON DEBT

UNCLAS STATE 164427

SIPDIS

SIPDIS
USUN FOR MICHAEL SNOWDEN

E.O. 12958: N/A
TAGS: EFIN EAID AORC UN
SUBJECT: UNGA:2-C INSTRUCTIONS TO JOIN CONSENSUS ON DEBT
RESOLUTION



1. This is an action request.


2. USUN is instructed to join consensus on the following
draft resolution: "External debt and development: Towards a
durable solution to the debt problems of developing
countries." The Department congratulates USUN negotiators for
their successful efforts to bring considerable balance to
this year's resolution on debt. You have managed to focus
discussion away from calls for additional debt forgiveness to
the crucial challenges of improving debt management capacity,
reinforcing national responsibility for sound debt policy,
and recognizing the need for greater transparency and
accountability in public debt management. You have also
gotten member states to take stock of the significant
progress made in relieving the debt burdens of the world's
poorest countries. Addressing developing country concerns on
debt in this cooperative and constructive manner will be
important as we begin the process in the coming year of
reviewing and assessing progress in realizing the Monterrey
Consensus on financing for development. USUN should
reinforce these points in a plenary statement that draws on
the text provided in para. 3 below.


3. Points for an explanation of position on the debt
resolution when it is taken up in Second Committee plenary:

-- The United States is prepared to join consensus on this
resolution. We strongly support the Monterrey Consensus that
affirms that debt is an important part of the development
finance equation, and that debt sustainability requires
national strategies for managing liabilities, as well as good
governance and sound domestic macroeconomic policies.

-- Much has been done to address the debt problems of
developing countries in the past few years. The Multilateral
Debt Relief Initiative has provided 24 debtors nearly $42
billion in debt forgiveness. In addition, creditors
participating in the Heavily Indebted Poor Countries (or
HIPC) initiative have granted an additional $45 billion in
debt relief to 22 countries that have successfully completed
targeted poverty reduction strategies. Another 9 countries
have entered the HIPC process, and should benefit from an
additional $18 billion in HIPC debt relief upon completion of
economic reform programs.

-- The U.S. has been a leader in promoting debt relief to
eligible Heavily Indebted Poor Countries and to the
low-income countries included in the Multilateral Debt Relief
Initiative. Indeed the U.S. goes beyond the HIPC framework
to forgive 100 percent of eligible bilateral debts for
countries that meet their commitments under the HIPC
initiative. We have also supported an increase in
grant-based financing in countries that are unable to secure
adequate financing because of their economic situation.

-- We are pleased that member states began to recognize those
accomplishments in this year's resolution. In confronting
difficult challenges, such as a debt crisis, it is important
that we periodically take stock of our progress, while at the
same time renewing our commitment to tackling the challenges
of the future.

-- While we have moved beyond a state of crisis in debt
sustainability, we recognize that there are still many
significant debt challenges facing individual countries and
the international community collectively. Countries,
particularly those benefiting from debt relief, must
strengthen their capacity to manage debt and recognize this
task as an important part of fiscal policy. As the
resolution notes, part of the solution is the establishment
of transparent and accountable debt management systems.
Helping countries to build the capacity to do this work is an
important part of the UN's activities. The United States
recognizes that the UN Trade and Development Conference plays
a significant role in this area, providing capacity building
support that we should acknowledge and further encourage.

-- We also want to underscore that debt relief programs must
focus on poor countries suffering from unsustainable debt.
Efforts to extend these specialized debt relief programs to
middle-income countries distracts from needed efforts to
implement fully the HIPC and MDRI initiatives and to ensure
that assistance funds are first directed to the most needy.
In the absence of debt relief, sound debt management has its
own reward in a lower price of debt financing for development.

-- This resolution on international debt management and
sustainability calls on member states to foster the political
will among creditors, both public and private, to provide
comparable treatment to debtor countries that have already
worked out sustainable debt relief agreements with the
majority of its creditors. By urging comparable treatment,
the UN is helping countries that seek to manage their debt
responsibly and to use the resources freed to invest in
development and poverty reduction.

-- The United States congratulates our development partners,
both creditors and debtors alike, for their cooperative
spirit in tackling the challenges of debt sustainability for
development and urges continued meaningful discussion and
support for effective debt management.
RICE