Voluntary debt conversions should be allowed even more freely since they are voluntary. We want to endorse voluntary debt conversions to be a mainstream method of financing the MDGs, and for developed countries to comply with their Monterrey commitment to give 0.7 percent of their GNP as external development assistance. The developed countries should strive to achieve their commitment of providing external development assistance equivalent to at least 0.7 percent of their GNP (and this includes funds from debt reduction), and in financing vital MDG projects and programs, including those of low- and middle-income countries outside the Heavily Indebted Poor Countries (HIPC). So far only five countries have complied with this commitment (Norway, Denmark, Luxembourg, The Netherlands, and Sweden). Two of the world’s and the Philippines’ top donors have very dismal records. Japan spent only 0.2 percent of its GNP for external development assistance in 2003, while the US spent only 0.15 percent of its GNP for external development assistance for the same year Given the dismal showing of developed countries’ commitment to the Millennium Declaration and the Financing for Development to allocate 0.7 percent of their GNPs to external development assistance to developing countries, there is much room to increase assistance and debt relief to both low-income and middle-income countries, including both HIPC and non-HIPC countries. The UN Secretary General has underlined the need for a new definition of debt sustainability: “[The] US$54 billion committed for debt relief to 27 countries under HIPC still falls far short of what is needed. [T]o move forward, we should redefine debt sustainability as the level of debt that allows a country to achieve the Millennium Development Goals and reach 2015 without an increase in debt ratios. For most HIPC countries, this will require ex-
clusively grant-based finance and 100 percent debt cancellation, while for many heavily indebted nonHIPC and middle-income countries, it will require significantly more debt reduction than has yet been on offer[2].” 8.3 A UN Campaign and International Campaign The UNDP and United Nations Department of Economics and Social Affairs (UN DESA) have undertaken activities to promote a debt relief strategy that incorporates meeting the MDG goals. Some of these activities include: * Conference held at UN New York on 30 October 2006 where the Indonesian MDGDebt paper was presented and the Philippine MDG-Debt paper was mentioned. * Some initiatives incorporating MDG financing needs into debt sustainability - Estimate MDG Financing Needs. - Compare this with government revenues. - Give debt relief to countries where government revenues cannot meet MDG financing needs. * Idea of ‘MDG Bonds’ – conversion of part of external debt to new bonds with debt service payments proportional to capability of government revenues minus MDG financing needs. UNDP and UN DESA are planning for a General Assembly meeting of developing countries to add to the already set agenda of discussing international bankruptcy and insolvency procedures. To this agenda must be added a discussion on the new concept of debt sustainability. As much support as possible from developed and developing countries, especially indebted countries, must be gotten for this. Then the countries and the UN should develop a proposal to the G8 on this change of debt sustainability concept and propose a change in the Paris Club Rules.
[2] From Report of the Secretary General of the United Nations, Ch. II, Freedom From Want, p. 18, March 2005.
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FfD: Finance or Penance for the Poor