Debt reduction, either through stock of debt reduction or debt service reduction based on a concessional rescheduling, will continue to be considered only in exceptional cases.

A. Further debt reduction

Debt reduction should cover a greater proportion of the debt, in certain cases the total debt.

Debt reduction is not fatal.

(c) The need for debt reduction

Debt service reduction, normally in the form of interest reduction bonds, has been offered in three ways.

The debt strategy should include, among other things, a drastic reduction of debt and debt servicing.

In those countries, drastic action was needed for further debt reduction.

Reforming countries in debt crisis require an adequate and permanent reduction in the stock of debt . (Ibid., para. 27)

57. A new approach in official bilateral debt calls for bolder measures in two key areas, debt reduction and the institutional framework for debt relief.

21. Stresses that debt relief should contribute to development objectives, including poverty reduction, and in this regard urges countries to direct those resources freed through debt relief, in particular through debt cancellation and reduction, towards these objectives

First, Greek debt reduction was postponed for too long.

(i) Measures for the reduction of official bilateral debt

(ii) Measures for the reduction of official multilateral debt

(iii) Measures for the reduction of commercial bank debt

An adequate and permanent reduction in the stock of debt for countries in debt crisis undertaking economic reforms should be made.

An adequate and permanent reduction in the stock of debt for countries in debt crisis undertaking economic reforms should be made.

Such steps include substantial debt reduction and the streamlining of debt relief procedures and requirements.

The need for debt stock reduction in these countries is now widely accepted.

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.

Generally speaking, banks choose from menus that have employed three main categories of options (not all are necessarily available in each case) debt reduction, debt service reduction and new loans.

Initially, to facilitate debt reduction, bondholders would face another haircut.

Secondly, debt cancellation and reduction should be extended and intensified.

It seeks to provide comprehensive treatment of debt crisis countries by debt reduction in three stages rather than a simple rephasing of the debt servicing schedule.

Undoubtedly, debt reduction and increased aid have a role to play in this process.

Yet they are able to see little reduction in the sum of the debt.

For some, reducing debt burdens to sustainable levels looks increasingly difficult within existing official debt reduction schemes.

More debt relief should be provided, including cancellation of debts, debt reduction and, more generally, innovative schemes.

The latter also resulted in a massive reduction in the aggregate stock of value impaired debt.

52. Operations within the IDA Debt Reduction Facility have increased sharply.

Others felt that even more substantial debt reduction should be granted.

Dividing debtor countries into sub categories would hamper debt reduction initiatives.

Chief among these changes has been the adoption, in most countries, of flexible exchange rates and reduction of external debt, particularly government debt.

Fifth, debt burdens that cannot be eased by growth, savings, or inflation must be rendered sustainable through orderly debt restructuring, debt reduction, and conversion of debt into equity.

These terms treat the debt owed by lower middle income countries and do not involve any write off of debt or reduction in net present value of debt servicing.

For countries with unsustainable debt burdens, timely and realistic debt reduction agreements are also essential quot (emphasis added). 17

and for a substantial reduction of all types of debt, including multilateral debt, for all categories of developing countries.

So, as austerity undermines growth, debt reduction will be marginal at best.

62. Productive investment should be the cornerstone to any debt reduction strategy.

Bulgaria could be eligible for a second STF purchase of 162.7 million, and additional resources in support of debt and debt service reduction operations.

The benefits of debt relief do not increase linearly with the amount of debt servicing reduced they materialize when debt reduction exceeds a critical mass.

As for the Paris Club, the concept of debt and debt service reduction has been more widely applied since 1988.

Donors must take the bold step of cancelling all remaining debt or else must institute more effective debt reduction measures.

Debt reduction would have a positive effect in this respect and would be a major step forward.

7. It must be recognized that debt reduction was in itself not sufficient to restore external viability.