Low external debt

Interest rates on government debt are still low.

An international debt strategy should incorporate measures to reduce debt and reschedule debt servicing and increase financial flows to low income and severely indebted countries.

Government debt service has in general become easier, owing to low interest rates.

For low income countries, external debt stood at about US 424 billion, of which US 356 billion were non commercial guaranteed debt.

Spain and Ireland had fiscal surpluses and low debt GDP ratios before the crisis.

Indeed, some low income countries with low debt servicing capacity will need to draw mainly on concessional official flows for the foreseeable future.

The question of debt sustainability analysis is also key to the resolution of the debt crisis of other low and middle income countries.

(b) Many low income and lower middle income countries still have an unsustainable debt burden and require urgent additional measures regarding debt relief.

But domestic savings remain low in the face of persistently high levels of public debt.

This week, such government debt paid around 3.2 , which is very low by historical standards.

Many low and middle income countries had experienced greater difficulties in honouring their debt commitments.

Our country apos s external debt of 10.8 billion places us in a much worse position than any other high debt, low income country.

We urge debt relief to be broadened to cover both multilateral and bilateral debt for all low income African countries and urge substantial debt relief for middle income countries as well.

In general, the Gulf Cooperation Council countries maintain low or modest external debt stocks and debt to GDP ratios and have accumulated substantial foreign assets.

6. The Paris Club had also accepted the principle of debt and debt service reduction for low income countries, although that reduction was still insufficient.

The current government has pursued tight fiscal policies, resulting in balanced budgets and low public debt.

Successive rescheduling agreements had not relieved the debt burden of the low and middle income countries.

And, as Reinhart and Rogoff say, a correlation between high debt and low growth is a sign that one should investigate whether debt is a risk.

In fact, the debt owed to the multilateral financial institutions represented a growing share of the ODA debt of low income and lower middle income countries.

This requires consistent macroeconomic policies focused on economic integration, food self sufficiency, low inflation, and reduced debt.

Low interest rates mean that the additional debt burdens that public borrowing will create can remain manageable.

China s investment in US government securities and other sovereign debt will continue to yield extremely low returns.

Progress also needed to be made on extending external debt cancellation to low and middle income countries.

Now, let's talk about the debt. Today, interest rates are low, lower than the rate of inflation.

The debt problem of some low income countries called for even more favourable terms of debt forgiveness, including a reduction of the stock of debt, in order to support their efforts to achieve sustainable development.

Greece overspent, but Spain and Ireland had fiscal surpluses and low debt to GDP ratios before the crisis.

This year, the Group of Eight countries have pledged increased aid and debt cancellation for low income countries.

The debt burden of countries in the region had been worsened by the persistently low economic growth rates.

Low or negative population growth also implies lower potential economic growth and therefore worse debt to GDP dynamics and increasingly grave doubts about the sustainability of public sector debt.

Deliberations on the question of external debt must take into account the increasing difficulties of low income countries whose debt was largely official in nature either bilateral or multilateral.

Their cash balances are extremely high, interest payments on debt are low, and principal obligations have been termed out.

Their sound financial systems, strong fiscal frameworks, low public debt, and strict adherence to inflation targets give them credibility.

So far, the country has not experienced a debt crisis, and interest rates remain exceptionally low, at around 1 .

Weak labor markets, low inflation, and debt overhang suggest that a fundamental re ordering of priorities is in order.

Action on debt relief and trade reform to benefit low income countries should also reflect the Millennium Development Goals.

There was also a need to consider the situation of debt distressed non HIPC low income countries as well.

So, how much room is left in the relationship between debt and economic performance for a country with low interest rates, low inflation, buoyant stock prices, and healthy prior growth?

Another priority is to ensure that low income countries that are striving to meet the MDG s, and which have large financing requirements, avoid a new spiral of indebtedness. The gains from MDRI debt relief will amount to precious little if low income countries emerge from their debt burdens only to start the cycle anew by amassing fresh debt.

In addition, the low income countries that also sank into debt crises, even while having relied mainly on official sources of funds, have yet to return to long run debt servicing obligations that lie within their debt servicing capacity.

32. In Africa, multilateral debt accounted for more than 25 per cent of total external debt and over 40 per cent of total debt service payments. In some low income countries that percentage was up to 50 per cent.

The Panel strongly supports the proposal that all debt should be cancelled, in any event for all low income countries.

However, for many low income countries as well as lower middle income countries the debt crisis is far from over.

A key feature of the group, which might be called the debt distressed, low income countries (DDLICs), is its heterogeneity.

Latin America s low personal debt levels have created an opportunity to build a constructive culture of borrowing while expanding economic opportunity.