Download Comments-on-SDGs_09.15

Remove these targets:
1) Total number of countries that have reached their Heavily Indebted Poor Countries Initiative
(HIPC) decision points and number that have reached their HIPC completion points (cumulative)
Comment: HIPC is now irrelevant. There are only two countries (Somalia and Sudan) which may go
through the HIPC process.
2) Debt relief committed under HIPC initiative
Comment: HIPC is now irrelevant.
3) International reserves (net of annual interest payments on the debt) expressed
Comment: This has little relevance to debt policy. International reserves are not the only way for
countries to protect themselves against externally caused financial crises; capital account
management and other policies are alternatives which may be much more effective. Furthermore,
holding large amounts of international reserves imposes an opportunity cost on governments
because the resources could have been invested usefully for sustainable development.
Change these targets:
1) Number of countries assessed by the IMF as being: In/at high risk/moderate risk of debt distress
The IMF debt sustainability framework does not properly assess debt's relationship to sustainable
development for a number of reasons:
- It basis 'sustainability' on whether a debt is and can be paid, not the impact of debt payments on
sustainable development (for example, on poverty and inequality)
- It is only carried out properly, including producing a risk rating, for low income countries.
- It does not properly take into account domestic government and private sector debts, external
private sector debts, contingent liabilities and payment obligations accruing to governments from
public-private partnerships
- It has a conflict of interest by being carried out by two large creditors, the IMF and World Bank
Alternative indicators should therefore be used instead / as well. If the IMF debt sustainability
framework is used, it should be made to align with the SDGs by:
- carrying out the assessment for all countries
- basing the assessment on the impact of debt burdens on sustainable development
- fully including domestic government and private sector debts, external private sector debts,
contingent liabilities and payment obligations accruing to governments from public-private
partnerships within the analysis
- over time, moving assessments to an independent body which is neither a creditor nor a debtor
2) Debt service as a percentage of exports of goods and services
Comment: Debt service is one of several relevant indicators. If choosing only one debt service
indicator, it would be most relevant to use debt service as a percentage of government revenue, as
this most shows the financial impact on debt on government finances, and so the ability of a
government to finance sustainable development.
As well as debt service to revenue, and debt service to exports, other indicators which could be used
include public debt to GNI, external debt to GNI, international investment position, and current
account balance.
Oher indicators which should be used:
1) "number of countries entering debt distress which receive comprehensive debt relief".
Comment: HIPC is out of date. But if countries enter debt distress, they still need comprehensive
debt relief to get them out of it, and thereby enable sustainable development to take place.
2) "no country in debt distress for two successive years, and minimum number of countries at high
and moderate risk of debt distress."
Comment: Rather than just measuring how many countries are in debt distress, there should be a
goal of not allowing any country in debt distress to continue in that state, and minimising those at
risk.
3) Number of countries that have passed comprehensive national vulture funds legislation, weighted
by proportion of international debt covered by such legislation.
Comment: One barrier to effective international debt resolution are the actions of vulture funds and
holdout creditors. One measure of showing international action on debt problems would be the
number of countries which have passed legislation which enforces internationally agreed debt
restructurings, weighted by how much international debt (debt owed under non-domestic law) is
covered by such legislation.
4) Number of countries that audit their debt stock based on responsible lending and borrowing
principles.
Comment: The quality of debt matters more than the numerical amount. If loans are well spent they
can enable sustainable development. However, they can also fund activities which undermine
sustainable development, and in addition leave damaging debt burdens. The more debt aits are
held, the more investigation there is of the quality of loans and debt, and ability of stakeholders to
advocate for better lending and borrowing.
5) Percentage of debt stock that contains properly collective-collective action clauses.
Comment: One proposal that has been suggested to deal with the problem of vulture funds is to
properly collectivise collective action clauses. Those advocating this approach (as opposed to an
international legal framework) should therefore also be advocating a target for how much of a
country's debt governed under international law is covered by collective action clause which are
truly collective across all of that country's debt under international law. This should include all
bilateral, multilateral and private debt owed under international law (not just bonds).
6) Percentage of debt stock covered by legal frameworks for sovereign debt restructurings
Comment: The failure at the heart of international debt is the lack of legal frameworks for debt
restructurings.