 We're delighted to welcome you to the launch of our report about the debt crisis, which is actually looming for much of the developing world. It has been a little bit bailed by the partial return of private capital flows to both middle income countries and low income countries, but given all the shocks that are prevailing in the international system starting from COVID, but also the risk of an increase in US interest rates, it is clear that this debt crisis is going to be very important and will return even with greater strength. Currently, many developing and emerging countries have very high levels of debt service, which is reducing their ability to fight COVID from the health perspective and to save jobs and companies is making it more difficult for them to sustain a recovery post COVID and particularly the transformation of economies to a green structure, which would be help avoid a climate emergency. And what we find in this report is that the G20 common framework, the important step is clearly insufficient and we're very encouraged that the heads of the International Monetary Fund and the World Bank have announced they would develop a scheme for linking debt relief with green, resilient and inclusive development. And we would like to believe that our report is an attempt to providing a blueprint for achieving this. And so I think it's very important to stress, as we do in our report, that debt relief has to be comprehensive for all the lower income and middle income countries that needed where debt is unsustainable and that it has to be comprehensive in the fact that we have to have equivalent debt reduction both from private and public creditors. And we have a sort of innovative proposal to have credit enhancement or credit guarantees equivalent to how it was done in the Brady plan in 1989 at the initiative of the US government. So to present this report, and we'll first have two very distinguished speakers. Shamshad Akkar, who has such a distinguished career that it would take me very long to introduce her properly. She's had a very senior career in the United Nations, but perhaps most importantly, she has been both finance minister and central bank governor in her own country, Pakistan. And then Uli Woltz, who will speak, who is the director of the Center for Sustainable Finance at SOAS, London University, and who's also senior research fellow at the German Institute for Economic Development. So and then we will have three very, very distinguished keynote speakers, Jose Antonio Campo, Alicia Varsena and Luica Saquende, whom I will introduce later, but it's something to look forward to their presentations as well. So Shamshad, please. Thank you, Stephanie. And good afternoon, good night, good morning to everybody, wherever we are all. First of all, as Stephanie has pointed out, a debt crisis is looming. G20 has made few announcements, but the debt deals fall short on several counts. It is really in this perspective that in November 2020, our colleagues together joined hands to put forward a proposal for debt relief for a green and inclusive recovery. Besides low income countries, it was proposed to extend debt relief to middle income countries that have been hit hard by the pandemic. We advocated linking funds released from debt restructuring to build resilience and a commitment by creditors and debtors to deploy fiscal space with globally agreed climate and developmental goals. Now in front of you is a new report. We developed this proposal further as the G20 common framework for debt treatment still excludes middle income countries, despite their debt vulnerabilities. Our concern is that we need a more comprehensive solution or resolution. This is not only evident from the highest debt stocks, but from these countries growing demand to secure new debt for the recurrent as well as investment requirements. The G20 deal still lacks incentives for meaningful participation by the private sector, despite some of the resolutions that have emerged. Also, the green, the G20 deal is not linked explicitly to a green and inclusive recovery despite the multilateral scores that countries need to push for a green and climate friendly investment moving forward. So for us cushioning the impact of pandemic on developing and middle income countries remains a challenge while advanced countries are rebounded. By 2024 output from emerging countries will be 8 percent below the pre-pandemic levels and we already know that the resolution of the debt crisis will be difficult with the existing multilateral debt framework. So resolution of debt crisis in a balanced, sustainable and just manner will be key to arrest the drift in the global inequalities and also in terms of the financial stability because of the growing role of these countries. Developing and middle income countries growth is critical for these countries to settle their repayments of old and emerging new debt which is being secured at a time when revenues continue to be low and the effects positions are quite vulnerable. So this the former report and the new report is all about how to tackle the debt crisis in a way that countries have really genuine fiscal space for a larger sustainable crisis response that feeds into the COP26 agenda and SDG agenda. With these opening remarks let me just present the outline which is really in front of you already which talks about the come before this storm, debt sustainability analysis, creating incentives for private sector participation and how to link the debt relief to a green and inclusive recovery and of course presenting the way forward. Let me now turn to the come before this storm as has already been pointed out very well by Stephanie that since the we may have this right now a calm in both the economic as well as financial front but the since the height of the financial market turmoil and large-scale withdrawal of international capital from developing and emerging economies at the outbreak of COVID-19 crisis markets undoubtedly have stabilized but when you go into the details of the country's economic situation there are multiple vulnerabilities. Part of the concealment also arises from the rise in the commodity prices and more favorable bond market conditions which seem to be providing temporary debt relief to secure new debt yet all this is masking the deeper underlying fact that many developing and emerging markets will be hamstrung in their attempts to mobilize the resources necessary for a green and inclusive recovery that puts back on track to meet their climate and developing development goals. The soothing come and palpable enthusiasm in debt markets is very deceptive. None of the problems of the debt overhands in poor countries have been resolved risk continued to loom large and for some countries a new round of debt issuance may further undermine debt sustainability a topic will cover more exhaustively. The IMF is concerned that recovery in advanced countries may lead to overheating and subsequent interest rates high that could trigger capital outflows and exchange rate depreciations that could balloon already concerning levels of external debt across the developing countries. Indeed a US interest rate rise could spell heaven for developing and emerging markets not to mention what is happening in the developing countries already where they because of the inflationary trends need to adjust upwards their interest rates which will make it doubly difficult for them to secure even the domestic debt. With this let me point to just the example of one continent not to go into details of all the other continents. Here is a graph that tells you that if you look at sub-Saharan Africa one of the regions with the biggest sovereign debt challenge the financial situation of many governments remain precarious. Debt and debt service costs are on an average where they stood at the beginning of the century when the debt overhang was reduced in a purposeful and comprehensive debt relief effort through HIPAA initiated. So we have lost the impact of that and we have now a deal which has really provided liquidity to 40 countries but by and large that's been absorbed by the bigger economies. So this chart in front of you shows the recent data on government debt as a percentage of revenues. In interest of time I'm not going to go further into it but move to the next line which again depicts another problem that we can see that external debt service burden as share of exports has reached pre-hippic levels in sub-Saharan Africa. So we are back to square one no matter what we did in the past because of the pandemic crisis. The last slide that I would like to touch upon is trying to wrap up what I have talked about is that protracted recoveries due to insufficient fiscal stimulus and slow progress in vaccinations will undermine development progress in global south. Already now high debt service levels are impeding crisis responses and threatening the achievement of the sustainable development goals with poverty reduction progress already reversed in a significant manner. In many developing countries external public debt service is larger than the healthcare and education expenditures taken together. Moreover high debt service levels are crowding out the room for crucial investments in climate resilience insufficient amounts of investment in climate adaptation and resilience will undermine both development prospects and public finances. Countries that failed to climate proof their economies and public finances face an ever worsening spiral of climate vulnerability and unsustainable debt burdens. So an effective G20 deal would be the way forward and it is encouraging to note that IMF managing director Cristelina Georgieva and World Bank president David Malkus both announced that their institution will deliver scheme for linking debt relief with green resilient and inclusive development at the climate change summit set for Scotland in November of this year. It is paramount that IMF World Bank scheme results in a bigger deal for debt relief for all countries in need and really pushes them into a real climate action that leaves no one behind as we always say in the United Nations and I am carrying the legacy of my tenure at the United Nations. So with this our submission in this report is to help out the multilateral development banks take through moving forward. Over to you Bonic. Hello, thanks so much. I'm shut and so I will now present the gist of our proposal to determine which country should be eligible for debt relief. Of course we first of all need to get the debt sustainability analysis right and arguably the current debt sustainability analysis framework that the IMF and World Bank use is not fit for the job and it needs to be substantially revamped. First of all DSAs have been for a long time been criticised for being overly using overly optimistic scenarios and underestimating risks. So there are some broader issues but very importantly we like to highlight that DSAs do not account for climate and other sustainability risks and they also do not account for crucial investment needs for climate adaptation or investments in achieving the sustainable development goals and these investments are absolutely crucial and as pointed out by Shamshat before countries that are not able to invest in climate adaptation, climate resilience and so on will get punished severely by a global environmental change. So countries need to be able to invest and this has to be incorporated into DSAs. They need to be based on realistic assumptions and account for fundamental spending needs for advancing development and resilience and so we propose that the IMF and the World Bank in close partnership with the debtor government and also with inputs from other organisations including the UN conduct comprehensive revamped DSAs and that this forms the basis then for eligibility for debt relief. Now any debt restructuring framework needs to incorporate adequate incentives to ensure that the private sector, that private creditors participate in debt restructuring and that they carry the fair share of the burden and so our proposal suggests that if debt sustainability analysis basically comes to the conclusion that a country's sovereign debt is of significant concern the IMF should make any potential new programmes conditional on a restructuring process that would involve private creditors. Data countries that seek haircuts by bilaterals would be required to also seek debt relief from private creditors but beyond that we need to design incentives to ensure that private creditors really participate in debt restructurings and so fundamentally they need to be convinced that participation is better than absentia and the experience with past debt restructuring suggests that we need a combination of positive incentives so carads but also a certain degree of pressure so we need a combination of carads and stakes and on the carrot side we propose that debt restructured debts would be guaranteed through a newly established guarantee facility for green and inclusive recovery which we would locate at the World Bank. This facility would back the payments of newly issued sovereign bonds that will be swapped against a significant haircut for the old and unsustainable debts so private creditors basically have the option of hanging on to their old debts which are not sustainable and where they face the risk of loss or participate in this debt restructuring where they can get new debt which are then credit enhanced so the facility would provide the partial guarantee of the principal as well as a guarantee of 18 months worth of interest payments. So that's the kind of incentive side but we also need more pressure on private creditors to participate and in the past in successful debt restructurings we have seen that moralization and regulatory tools can work to get debtors to the table and we propose that the financial authorities of the major advanced economies but also very importantly China and also the authorities for major financial centers could play an important role to bring creditors to the negotiation table. Now we do want to make sure that debt relief also delivers tangible results and so it should not only provide some temporary breathing space it should really empower governments to lay the foundations for sustainable development enable them to invest in strategic areas of development which of course have to include health we have in those severe health prices but also other key areas such as education, digitization, cheap and sustainable energy and also very very importantly climate resilient infrastructure and under our proposal an agreement on debt restructuring would require debtor countries to commit to reforms that align their policies and also their budgets with the agenda 2030 and the Paris agreement and basically we suggest that the country commitments should be owned they should be designed by the country government but under involvement of national parliaments and also in consultation with relevant stakeholders so importantly they should not be imposed on governments by the global community so we're not talking about some IMF conditionality package or something and very importantly these agreements should really reflect the priorities of the countries and to this end we propose that governments advance their own green and inclusive recovery strategy or GERS as we have termed it and countries should government should should not have to develop new comprehensive plans and so on there are already a lot of national strategies plans and visions out there they should basically draw on existing SDG, NEC, what have your plans but put together a short document that would highlight the key policy priorities for the recovery which of course should be green and inclusive along with a set of key performance indicators that the government seeks to achieve this strategy should also include a spending plan and it should be guided by a set of principles that will ensure that the recovery is in line with the SDG agenda and the Paris agreement and here you see the principles that we put forward for a green and inclusive recovery six of them the first policies and spending should be directed towards supporting green and inclusive recoveries in line with the SDG set out in the agenda 2030 and with the girls of the Paris agreement second no public money or guarantee should be used to finance the development of new fossil fuel supply, third fossil fuel subsidies should be shifted towards a provision of clean and importantly affordable energy, fourth the recovery should be not diminishing the integrity of a country's ecosystem but help to maintain the biodiversity in line with global biodiversity targets, fifth measures and policies should contribute enhancing the overall resilience of the society and the economy so that it's better prepared for a volatile future and climate change really demands us to become more resilient and last but not least public policy should ensure that the low carbon transition is a just one and so we believe that this set of principles will help debtor governments to work towards achieving the sustainable development goals by 2030 and help achieving a just transition to net zero by 2050 so the government would put forward its green inclusive recovery strategy which would then undergo a relatively brief but importantly a public and transparent consultation process facilitated by an independent mediator which should be appointed by the UN secretary general this consultation process should involve all relevant national stakeholders importantly the parliament but also civil society and academia and also international stakeholders and this should ensure that this strategy then reflects and achieves the development needs and aspirations of the country but also that it is informed by the latest scientific knowledge regarding the unfolding sustainability prices the debtor government would then revise the strategy according to the feedback from this consultation process and the strategy would then form the basis of a debt restructuring to which both debtor government and public and private creditors would agree the envisaged spending under this strategy would be then sourced from a the new fund for green and inclusive recovery which would be created in the country and into which a portion of the restructured payments would be channels if there is already an existing national fund which could be used for this purpose and of course and and we don't need to create a new one and the government would be free to decide how to spend the money from the fund as long as it's in line with the goal set out in its own strategy we foresee steering group to monitor implementation which also would comprise the different stakeholders and of course also importantly the government should commit to enhancing debt transparency, adapting sustainable borrowing practices and to strengthening public debt management capacity and domestic resource mobilization because of course we don't want to have replays of debt restructuring time and again so that's an important element too. Here you have an overview of the proposal so basically IMF and World Bank conduct and enhance debt sustainability analysis if a country is eligible for debt relief it develops its green and inclusive recovery strategy where different stakeholders can feed in. Once there is an agreement there would be a debt swap, old debt against new green inclusive recovery bonds between the debtor government and the private creditors, public creditors so bilaterals in particular would also take a haircut so there would be comparable treatment between private and public creditors, multilateral development banks a bit of a different story there could be for iDAR countries there could also be some debt restructuring but that would have to be refinanced either through goat sales or bilateral donations or SDR. I'm sorry to interrupt you but because Antonio as we know. I'm almost done. So just a few words to close so the debt situation is already constraining recoveries and investments in sustainable development and it is very likely that we're going to see an escalation of the debt situation in the coming years when suspended debt payments are due and also when interest rates in the US will start to rise and we've seen many times in the past that this will have impacts on capital flows to develop and emerging economies. So even though right now things look relatively benign in many countries the underlying debt problems as Shamshad said are there and we need to be prepared we need to tackle the looming debt crisis now and delaying the inevitable debt restructuring where it is needed will leave these over indebted countries and their populations worse off and at this point in time we really cannot afford to let these countries and their people down. So we argue that it is time for the G20 to step up and provide all countries that needed with debt relief and the opportunity to pursue the green inclusive and resilient recovery. Thank you very much and the report is online available now. Thank you. Thank you very much Shamshad and Uli for this excellent presentation of our report. I now pass very quickly to invite Jose Antonio Campo who will be our first keynote speaker and he has to leave sooner after his presentation because he's talking to G24 finance ministers so I apologize for rushing. Jose Antonio Campo is known to many of you because he has this incredible mix of high level experience both nationally and internationally in public service and in academia and just to give you a small sample he at the global level he was under secretary general for economic and social affairs and he was also candidate for developing countries to be president of the world bank at the regional level he was executive secretary of ECLA and at the national level he's been finance minister and agriculture minister and director of national planning but as an academic he's also published or edited written or edited over 50 books and over 300 scholarly art. Jose Antonio the floor is yours I will then present the other very distinguished keynote speakers after he finishes because as I mentioned we have a really embarrassment of riches we have a dream team of keynote speakers and I'm very grateful to them for having accepted having Jose Antonio Alicia and Louis giving us the valuable insights thank you Jose Antonio. Well thank you Stephanie for your invitation your kind introduction let me also celebrate the presentation by Shamsha Danuli and of course I'm sorry to Alicia and Luis for the fact that I have to leave just after I speak because of my other commitment with the G24. Let me say that I entirely share this document let me just say that I will have it put inclusive before green that's my only criticism that I will have called this debt relief for an inclusive and green recovery anyway that's perhaps because of my obsession for social issues and for an inclusive economic development but this is certainly with that little exception I share entirely this. Let me make a first of all praise the fact that the the emphasis of this document on the fact that existing mechanisms are insufficient therefore that we need an ad hoc mechanism of some sort to manage the rising countries with debt problems under the current crisis. Unfortunately I think and this would probably be a point that I should underscore as an additional let's say to this report is that we I mean we manage the debt crisis of Latin America with an ad hoc mechanism then the debt issues of low income or the poor countries around the turn of the century with other ad hoc issues so maybe we and this is a very important point we really have to have a stable institutional mechanism to manage these issues so it's sovereign debt restructuring mechanism of an stable character to manage these issues but and that's why you know I have been proposing for a long time a sovereign debt restructuring mechanism which I will preferably locate in the UN but it could also be located with a significant autonomy for the decision making body in the IMF I think in any case that's the you know the long-term implications but the mechanism that is suggested here to manage the current crisis is a correct one it borrows from the experience of the of the Brady plan on the mechanism that is suggested of a of a guaranteed facility managed by the World Bank is you know it's one a very important mechanism very similar in a sense to to the the mechanism that the that was designed under the Brady plan perhaps in some cases it could be complemented by mechanisms such as the you know changing debt for for donations of some sort particularly in during the Latin American debt crisis for actually for many green projects let's say in the for example in in some countries but the but the mechanism of the similar to the Brady plan I think is a great proposal I think we should continue pushing for that the mechanism the suggestions or the proposal also suggests that there should be debt relief from multilateral institutions to low-income countries and that of course generates a financing requirement on top of the institutional requirement that has to be managed let me just point out that the SDRs would not be the mechanism because you know the one who donates let's say SDRs will still have to pay for the interest payments of the SDR so it has to be a explicit donation by the developed countries and so the mix of the Brady plan for middle-income countries in particular with the with this multilateral debt relief for low-income countries is a it's a very interesting proposal that I think should be discussed and let me perhaps finally point out the implications that this has for the proposal has for for creating rating standards both for multilateral institutions if they do debt relief although they did they do rate their relief in the past during the the highly indebted poor countries initiative but the but it does generate this a very complicated problem that the multilateral institutions should go forward without any downgrade let's say of any character but this is also true let's say for for countries that borrow private capital markets and they do debt restructuring I think the the trade rating agencies with their prosyclical pattern of ratings has done a lot of damage to the international community and this should be regulated to avoid the the that prosyclical standard which actually has made made some low-income countries that could access DSSI not being able to access it because of the fear of being downgraded so I think the you know in the long term beyond the sort of debt restructuring mechanism we have to have a standards a strong international standard for creating agencies in order to avoid this prosyclical pattern and to counteract this proposal such as this one for you know a good recovery of the middle-income countries thank you very much and again sorry to to be able to to have to leave and now because of my other commitment thank you very much to all of you it's very nice to be with so many friends today goodbye. Hi thank you so much for Santonia for your presentation and for making so many important points on SBIRM, on rating agencies, on the need to preserve the ratings of MDBs so thank you very much I realize you have to leave so thank you very much. Okay. So now I will introduce our next keynote speaker I apologize to Alicia because she was going to be the first speaker but because Jose Antonio had to leave we gave him the number one place so Ali we're very lucky to have Alicia Vincenna as our second keynote speaker you probably all know her with her distinguished career within the United Nations particularly in Sebal or ECLAB since 2008 where she has been executive secretary and performed a very valuable role there including on initiatives on debt for nature for the Caribbean which has in large part also been an inspiration for our work before that she would perhaps people don't know is that Alicia is started her career as doing research and policy work on the environment in fact she was under secretary in Mexico of the environment and she started her work at Sebal as chief of the environment division so we're very lucky that we have her because she really helps carry out this bridge between debt relief and economic analysis and environment as few economists could do so thank you very much Alicia and we really look forward to your presentation I think you're muted Alicia good morning to everyone and thank you very much to to you Stephanie to the wonderful presentation of my dear friend Shamshad and Uli I really enjoyed it very very much I would like to to start by saying that congratulations because I think this document really makes a very very useful and innovative contribution to the discussion of the debt situation which is constraining many of the responses of our countries not only for the recovery I may say also for the emergency we in the majority of the developing world we are still confronting the emergency because of the unequal distribution of vaccines so one one element that I think you should at some point even maybe mention in your paper that there is so much urgency to close the asymmetries in the at the global level asymmetries that are both health asymmetries access to vaccines but also climate change we have many many asymmetries and access to to financing so global asymmetries in my view are are being more and more deepened your the paper is very innovative in the sense of the proposals for debt restructuring as a stepping stone and let me say this as I believe should be included in the paper at some point which is the the the basis for a new global multilateral mechanism I believe and we believe and I think Jose Antonio was a little bit saying that that we need we are aiming at the new global multilateral debt restructuring mechanism and this proposal is part of that new architecture that we need to build at the intergovernmental level and these new architectures should include first of all the inclusion also of the credit rating agencies and that is we need a public rating credit rating agency and of course we need to rethink the whole debt restructuring mechanism so is of course this is a concrete proposal to do that to restructure but I think it has to be part of a more extensive architecture that needs to be done the document has specific recommendations to address the immediate challenges and to enable sweep sweep the recoveries and urgent needs and what I like very much is it's in line with Agenda 2030 and the Paris Agreement and I think this has to be also highlighted all of course critical to the proposals is the the guarantee facility the facility for green and inclusive recovery because this facility has to be designed in such a way that it will also I would say attract private sector and the commercial sector it has to be managed by the World Bank I hope that it could be also somehow connected to the regional and sub regional banks as well I think that the interesting part I guess is that the restructure repayments will be channeled into a fund for green and inclusive recovery and I think this could be there are some national funds at least in this part of the world that could be used for this purpose as well that is instead of only the World Bank we can also use the national architecture of banks and so this this could be something interesting this happens particularly in middle income countries which I also believe that what's happening today is all the all the responses coming from DSSI from the G20 from the G7 are covering the low income countries but they are not covering the middle income countries and I think you said it very clearly also as well we are very happy that you are using a class proposals for resilience fund and debt for climate adaptation and in this sense we see ideas in the document that are very much in line with a class views and I must say that we are progressing very fast in case studies that you may wish to use in in your paper or in future papers we are advancing in countries like Antigua and Barbuda, Saint Lucia, Saint Vincent and the Granities because as you know the combination between private debt and public debt is very different so the solutions are also different but there's one interesting thing also and that are what are the key elements for successful debt negotiations that we have learned from in this region we have learned from it for example that Grenada in their discussion used an instrument that could be also attached to this climate sort of debt sustainability to this green and inclusive recovery they use a clause that is the hurricane clause that is and this is very interesting to use some of these state contingent clauses that could be attached to hurricanes to disasters to to climate vulnerabilities and and and we can share with you some experiences there now the the other thing is very interesting to and I like that very much Uli when you say each country has to prepare their own plans for climate risk and spending for resilience and I think there is work with the regional commissions could help for example in the cases of the Caribbean which I think are going to be the first in line or should be the first in line because they are so highly indebted that if we don't do something for them and and the World Bank and the IMF don't consider their situation we might be ending in big crisis so as you are putting examples you know you you have very good examples on the African case I think it would be interesting to include some Latin American cases as well as I said we have analyzed at least some Caribbean Grenada is very interesting Ecuador and how they negotiate with the private sector particularly with BlackRock and and how creditors of such a size could come to the table which arguments could be the good ones and with Argentina the collective action clauses so in this proposal of a dead relief or a green and inclusive recovery I think we should add some innovative instruments like the hurricane clauses like SDG bonds like the collective action clauses the cacks that could be useful then I think that one of the things that we need to understand is the debt service costs because in this region Latin America and the Caribbean is has to pay 59 percent of their exports goes to debt servicing so this is something that needs to because if recovery is not connected with exports with trade it's also something and 59 percent of their of the debt services is enormous so and so this is affecting the fiscal and the vulnerability of many of our countries now and as particularly smaller economies such as the Caribbean again with the tourists tourism has completely dropped and they don't have any sources of exports if we consider tourism but this is happening to the other small island development states so I think a special consideration to middle income yes but small island development states I also believe should be particularly mentioned now Latin America and the Caribbean is the most indebted region in the developing world 79 percent of GDP and the total external debt of the general government is 56 percent and as I said debt services relative to export is 59 percent of GDP so this is making this very difficult and the reason why we are suggesting the credit rating agencies and we have had this discussion with you Stephanie we have this through three credit rating agencies Moody's standard important pitch which shows that in our in our countries we we simply have 21 economies that are considered high or very high risk they have been downgraded by these three credit rating and even Chile who has such a good fundamental so something has to happen I mean they are still thinking that business as usual is what we have in the world so credit rating agencies has to be part of these recommendations now the lack of international cooperation towards mix I think it's toward middle income countries is something that we really need to highlight as well I understand that you are more or less going to low income countries but middle income countries represent 75 percent of the world population 30 of the aggregate at the month 96 of developing country debt excluding China and India so so this this is where we have the vulnerabilities and we cannot ignore the fact that middle income countries are characterized by high levels of inequality and also sustainability so it's time for the middle income countries to be part of this debt relief for a green and inclusive recovery actually Argentina the minister of Argentina Martin Guzman was telling me that one of the major criteria they are going to use to renegotiate their debt with the IMF is going to be climate change so I think this is very interesting we have to use this opportunity we have a big country like Argentina that is moving away from fossil fuels or short because they for for the purpose of negotiating their their debt because the best suspension initiative frankly it's ridiculous in in Latin America and the Caribbean to date the region the the countries that participate in the dsa side is dominica renada san lucha and san viz and then the granite four four out of 33 come on not even Haiti who should be the first and by the way Haiti has not received even one vaccine so I mean what are we gonna okay so um and I'm coming to to to the end and I was very excited by by your paper so that's why I'm sorry to take so much time but I think that the the the paper should emphasize also the international cooperation that is needed to to to in certain ways to make sure that there is an understanding that liquidity exists and that we need is a redistribution of liquidity from develop to develop in countries and and and it's not only expansion but it's redistribution and then I think that the analysis of of debt in the document that refers to the death of the central general government but also needs to take into account that the significant increase in debt is affecting enormously the productive sector the non-financial corporate sector including private and public and private firms so in latin america for example 50 percent of the outstanding stock of debt security issues and non-financial corporate loans 37 percent of the total non-financial corporate sector is holding 37 percent of the total so I would say that in addition we we should look at the non-financial corporate sector that I think has experienced a fall in profitability liquidity and and and decreasing its repayment capabilities this is a report from the IMF and moreover evidence shows that firms are highly indebted so the private sector is very indebted so where is investment going to come from I understand the incentives it could be also seen in this region not as incentive but as conditionality so we have to be careful there I'm going to put the example of Mexico I mean Mexico is not blowing for debt and they are going exactly the contrary in terms of fossil fuels so so that that is something that we need to to to to see um anyway let me let me say that finally that what we need is to align the creditors participation and interest with those aligned of debt debtors and as I said before to include no no instruments like for example the collective action process that align interest of private sector and serve to expedite the process and avoid costly delays um the other part that I think it's is very interesting is the using the brady the Brady plan which is a an interesting reference and is useful but the type of creditors the legal frameworks and the financial in the current context are not the same as those of the Brady plan so this is something that needs to be carefully seen because creditors are mainly asset managers which behave very different than banks they have different interests some asset managers are not really engaging providing credit but rather are specializing in legal arbitrage that is the specialized buying sovereign at the discount in the secondary market and forcing legally a government to pay the full amount so what's the incentive of this type of asset managers to participate in the scheme that you are proposing that's a question that I have and the legal framework for settling sovereign debts are in lower district Manhattan courts which imposes important costs and limitation on debtor country so given the heterogeneity of debt profiles and debt vulnerability in middle income countries and in latin america and the caribbean and then reduction and restructuring strategy should have should avoid say one side fit all I mean that's that's very important and we have highlighted three lines of action all indebted economy should benefit from debt relief or stand stills and we are even talking here of high public indebtness like in the case of argentina 68% of gdb and the majority of sids barbeiros velice bahamas over 117% of gdb so economies facing short term debt profiles or high debt service burden should be entitled to some type of debt relief caribbean sids as I said before debt services payments amount to to they have to be reduced so not only the debt but also the debt service and in some middle income countries climate risks and green inclusive recovery is tied as well to disasters and to climate change as you know vulnerability so the inclusion of hurricane closest as I said before could be very important they were part of barbeiros debt restructuring so we do have examples granada and barbeiros included this this type of of instruments and and finally any successful debt relief restructuring mechanism requires as I said at the beginning and with this I finished to modify to change to restructure the international debt architecture there is a need where obligations should be there also for private creditors otherwise it's going to be very difficult and we have to consider that financial stability is a global public good that can now be attached to another public good which is climate security so welcome your very thoughtful paper sorry to have taken so long I would be happy to send my comments in writing if that if you think are useful over to you Stephanie and thank you so much thank you so much Alicia I was very very powerful but also very insightful I think you were very right that in all the points that you raised for example on these contingent clauses for hurricanes I think that's very interesting experience of barbeiros and dominica and I think we have to learn much from that and more generally you made the point that we were right to look at the Brady plan because we were trying to look for precedents because people in the finance sector always work on precedents but I think it's very important to also look how that can be applied to the different actors like black rock and to draw on the bargaining and discussions that countries like Ecuador and Argentina did and thirdly I would just like to stress that I think your point about the rating agencies is very important because I think and I see Louis nodding both in particularly I would say in Africa but also very much in Latin America that the countries have to look over their shoulders of how the rating agencies will react to any any request for debt relief or even for a postponement of debt and therefore I think regulating properly rating agencies as you and José Antonio said and thinking about the possibility of a public rating agency as we we raised in our paper with Moritz I think have to be put on the table as part of the international discussion so now I'm thanking him for his great patience I'm delighted to introduce Louis Kasekende and Louis Kasekende has had again a very distinguished career both in his own country and internationally I think just to say it more generally I think Louis is probably one of the best known macroeconomists in Africa and international about Africa so we're really delighted to welcome you Louis and also he's had a important career in the central bank of Uganda the bank of Uganda has had a research as twice deputy governor but he's also had an important international experience as chief economist of the African Development Bank as executive director at the World Bank where he was representing 22 African countries and now as executive secretary at Mefti so Louis thank you very much for joining us and I'm looking very much forward to your presentation thanks a lot Stephanie distinguished invited guests ladies and gentlemen I am pleased to join you during the launch of this report on debt relief for a green and inclusive recovery initiative which is taking place at the occasion of the land and climate action week I thank you professor Griffith Jones for inviting me to deliver some remarks during this occasion ladies and gentlemen this report is being launched at a time when the world is continuing to face numerous and daunting challenges as a result of the COVID-19 pandemic the pandemic which was initially thought to be a health pandemic has destabilized our health systems just destabilized our societies just destabilized our economies significantly about a year and a half since then we have witnessed economic contractions and historically low growth rates in many countries especially in sub Saharan Africa trade has been disrupted domestic revenues and foreign exchange receipts have dwindled substantially while public financing requirements are rising as part of the government's efforts to contain the pandemic and protect vulnerable groups for developing countries COVID-19 pandemic has exposed the debt and the related vulnerabilities with indicators showing that countries are sitting on a ticking time bomb while others are already facing debt service challenges I think the charts that were shared bring it out very clearly following significant debt cancellations provided to some 30 sub Saharan African countries in the context of heavily indebted poor countries and the multi debt relief initiative in the early to mid 2000s the median public debt to GDP ratio fell from about 85 percent in 2001 to 34 percent into 2011 however the trends show that the countries have taken up more debt driving the median public debt to GDP ratio to about 55 percent by end of 2019 and now the current estimates show that by the end of 2020 we'll be looking at a debt ratio of about 61 percent to GDP this rapid this rapid pace of sovereign debt accumulation is raising concerns among policy makers the analysts and the international community and I think during these presentations you have all heard that there is this looming looming debt crisis a significant amount of public resources are there for being channeled to debt service as opposed to allocation to other areas that are critical for attaining SDGs especially education health and infrastructure the policy makers in developing countries are facing significant and practical challenges how do they deal with the health social and economic crisis caused by the pandemic at a time when domestic revenues have been ordered and external financing conditions remain tight how do they mobilize resources to meet the other national development objectives as well as the continental and international sustainable development costs how do governments continue meeting the debt service obligations while the fiscal space continues to narrow these are real challenges the launch of this report on debt relief for a green and inclusive recovery initiative this is there for timely as it addresses some of these above mentioned challenges the report presents a practical and comprehensive approach to deal with key development challenges facing developing countries the initiative is premised on the fact that the G20 common framework for debt treatment will not suffice to tackle the debt problem facing many developing and emerging economies in this regard the initiative is anchored on three pillars it is through these pillars through these pillars it is envisaged that resources would be freed from debt service in order to provide developing countries with fiscal space at a critical time to address the three crises that they are facing the health social and economic crisis the debt crisis the climate and the environmental as a capacity building institution the macroeconomic and financial management institute of eastern and southern Africa which is meff me comments you professor Griffith Jones and your team for this report you can count on our support to advance the proposals contained there in both at a national and international level this is the time for the international community to act decisively and not to wait for countries to in to to get into higher levels of this space I would like to mention a few more areas that need to be considered as you finalize the report firstly there is a need to relook at the proposed conditionalities of countries that participate in the debt relief initiative we can draw on the early experience of the hippie initiative where not many debt stressed countries benefited from the original framework which was considered to have conditions that were challenging to meet secondly there is need for the proposed initiative to provide a reasonable period for countries to benefit from debt relief for developing countries to fully recover from COVID-19 pandemic there is need for creditors to provide debt relief well beyond 2021 thirdly there is need for the proposed initiative to consider practical solutions that address the domestic debt burden in some of the countries domestic debt has increased significantly over the years and is characterized by high interest rates that pose additional challenges to governments this is exacerbated by the fact that domestic debt markets are undeveloped and dominated by a few instruments and institutional investors fourth there is need for capacity building to support this debt relief initiative especially in areas such as loan negotiations and debt restructuring lastly there is a challenge for all of us there is need to put in place long-lasting frameworks for addressing the issue of debt burden in developing countries so that this does not become a recurring theme in other words how do we build economic resilience in developing countries and move beyond debt restructuring when faced with pandemics such as COVID-19 or other exogenous shocks this is a collective responsibility it is my sincere hope that this report would also look into these areas mehmi looks forward to collaborating with you in these areas I thank you for your attention thank you thank you very much we just again there for a very valuable points that you make and also for your valuable support offer of support because if we continue on this path we would very much like to collaborate with mehmi in the same way we would love to collaborate with sepan so I think because time is running I would now pass pass the floor to my co-author Kevin Gallagher who will be chairing the Q&A but thank you again Louis I think it was very very important for all the points that you made thanks Stephanie and let me echo my colleagues thanks and praise to our keynotes and to all of you in the audience for for coming today two quick clarifications before I field the number of questions we have a good 15 minutes to have Q&A one I think it's important to clarify that this is no substitute for a comprehensive sovereign debt restructuring mechanism but as Alicia Barsana says it's a it's a stepping stone in a vehicle for accelerated debt swaps for a green and inclusive recovery nor do we see this as the only only solution to recovering from this crisis and moving forward we've all been big advocates and noted in the report for a stepwise increase in special drawing rights for new concessional and grant financing that goes to developing countries but we also see the debt relief with real hard haircuts and real participation by the private sector to be one of the key pillars of a multi prong policy and that's what we really propose to you today a facility that would allow for debt swaps for green and inclusive recovery and a specific set of recommendations and instruments that would bring the private sector into the into the into the realm in a in a meaningful way we know that the a lot of our speakers today just reiterated that the math just isn't there we heard from Alicia Barsana that that we're talking about 59% of revenues is going towards debt service in Nigeria last year that was 90% and that's just to get to the level of fiscal space that countries had in 2019 but we know that we need a stepwise mobilization of capital to meet our sustainable development goals and Paris climate challenges over the next decade so without these kinds of schemes in place we won't have the pair to meet those meet those so in that spirit we have a number of questions i'll try to get to as many of them as we can and the first one is from is from whoops you just deleted it there was one by a by a gentleman that that had said what if what if the in this scheme on debt sustainability analysis which is done more properly than those currently done deems a country to be under debt distress and eligible for this program however a credit rating agency still might do its own analysis and see a country in in to be in good shape how would we reconcile the two of those that might be a good question for uh for for Moritz um uh Miriam Vander Stichell asks how will your proposals avoid that they are fully in line with private sectors development of the sdg financial market instruments which includes many new debt instruments there was a question by a peter richter which i think i'll take during the q and a which is uh what uh you speak a lot about private bond holders here but uh chinese commercial actors are also a big part of the debt situation in in certain countries uh how how could they participate in this scheme i will uh i will discuss that one in the q and a um a specific one for uh uh for shamsher octar um uh from maliha me me bangash who says what specific and concrete measures might pakistan need to take to be eligible to this for this particular scheme uh motaka zaiwa asks what are some of the inclusive policies we talked a lot about green here she's echoing what hose antonio compo said who hopes that it should have said inclusive and green what are some of the cornerstone inclusive kinds of policies that we'd want to see uh in some of these and finally burned luderman asks can you get a little bit more specific about what some of the sticks that you would recommend for the private sector you talk about the carrots the guarantee facility please get more specific about some of the sticks so if we could start with why don't we start with uh with shamsher and uli and then see if any of the other authors uh want to uh respond to any of them maybe more it's on the credit ratings in me on china we'll start with shamsher thank you kevin for those list of questions i'll just take what has been floated by a pakistani colleague um pakistan has a very high external debt position but it's really humans with the domestic debt debt too so focusing on external debt i think pakistan has undoubtedly been beneficiary of the dssi but um it has not extended a request for debt restructuring under the common framework uh debt agreement um obviously uh if it does so it'll impact not only its country rating but also um the new issues that it is floating will be priced higher than otherwise pakistan has resisted to the do that because it went to the market very recently and one of the big new things that pakistan has done is to float a green ball for a hydro project so it's gone it's broken some new grounds and its issue has been oversubscribed so in some senses i would compliment that government's prudent um um thinking and strategy has helped us helped it to raise issues well before the interest rates are going to rise and when interest rates go up uh it is going to be more difficult for pakistan to service its debt because the previous dssi has helped it to repay its debt now one last thing pakistan is an is in an imf program so i'm sure pakistan is getting its advice from the fund program too on what to do next um but it has recently announced a very ambitious um growth package which is full of tax incentives and also is a very inclusive budget the expert advisory council of the prime minister whose member i am personally right now has packaged a very good emphasis on the inclusive side my advice to pakistan government is to go big on renewable energy it has a very ambitious good program it's announced its renewable energy policy and uh if we can link the future um debt restructuring if they if they wish to seek for it and if they are able to extend their imf program i think they need to really strengthen their investment program to have more inclusive and resilient uh growth they are going for growth but they need to emphasize resilient um and climate friendly growth prime minister himself has launched a range of initiatives and he's also a steering uh a member of the steering committee himself of a pakistan environment fund so there is a political commitment that he has which will help move forward in pushing for the climate agenda and for pop26 presentation so over to you kevin thanks um thanks so much amshad um more it's yeah i think you tossed the question to me about the rating agencies because um as some of you will know i i let the sovereign ratings team at smp for almost two decades um and i would say um sort of with with this background that we shouldn't spend all this much thought about rating agencies whether rating agency will um downgrade or not in the greater scheme of things doesn't really make a difference the question was what happens if the imf decides there is a sustainability problem um and the rating agencies as now it's all fine the agencies have no jurisdiction i mean there are private companies they voice their opinions sometimes they're right sometimes they're wrong depending on what you mean with right or wrong but they they don't really have any say in this and it's also probably a quite unlikely um event that rating agencies would be sort of more optimistic than the imf which is sort of perennially optimistic um in the past so i would really sort of encourage everyone not to bark up that tree it doesn't make such a big difference um a rating agency will have to declare default if there's a restructuring that's the definition um but it doesn't matter that much you know once you have the restructuring under the belt you have a stronger balance sheet you'll be more credit worthy life will be better so don't worry about uh you know getting uh um getting a downgrade um this will happen but it doesn't really impact uh the future of the country and and we shouldn't allow certain um investors to cultivate these scare stories about the damaged rating agencies can do i've seen it for two decades they can't thank you uh i'll respond to the to the china question by by peter richter um you know peter peter asks uh he says gosh um how to deal with china because he says that uh that they are uh you know squeezing countries into uh you know taking their collateral first that you know that that's not true under the dssi in the common framework china is uh thus far has has negotiated most more debt than the paris club and obviously the private sector is not engaged hardly at all we see china is as core to this scheme uh china's commercial commercial banks which are a significant portion of some of the debt but to put it all in perspective first we have to realize if you look at emerging market and developing countries the lion's share of it is with private bondholders uh for the low-income countries it's largely the international financial institutions and bilateral debt of which china is the largest in the bilateral piece uh often some of those uh sort of basic basic picture isn't isn't looked at there so if you go back to the to the brady scheme the chinese investors are are sort of key here because all of the chinese debt are are long-run bank loans uh unlike the bondholders obviously so if you go back to the brady era what what makes this uh perhaps particularly attractive on the china side is that china can convert some of those long-run uh bank loans into bonds uh that will allow them to uh you know after the haircut that comes out of the enhanced dsa that would be beneficial for china because it would reduce the concentration risk that their current uh commercial bank loans have right now right now they're very exposed to a handful six or seven countries or about half of their overseas debt um by swapping that out and converting those into bonds they can sell those bonds on on secondary markets uh and also uh with the guaranteed facility uh see the guarantee that they'll be getting that financing back um so we really think that this uh this is this is a scheme that works for commercial banks which in the west there isn't a huge amount of commercial bank debt out there in in the emerging market and developing uh countries the bulk of those uh bank loans are are on the china side but in the private sector uh this scheme is is really key for for bondholders as well but china is particular we would hope that china also plays a role in this uh building on the leadership that they've played on the dssi thank you uh sephanie yeah i just wanted to compliment uh what moritz has said i think the different views on the rating agencies and although he's very knowledgeable he may be his views may be shaped a little bit by his previous work um so i i think it's very important to listen both to the developing debtor countries and emerging countries and to their creditors and though it's not the only factor uh obviously rating agencies i think they are an important factor and it's very strange to have an institution which is part of this international financial architecture as alicia said which has a big influence and which is not properly regulated till the global financial crisis they weren't regulated at all and the of course the initial reason why these uh rating agents were created and the idea of rating was to stabilize market so if they do have uh come to cyclical sorry proscyclical impact as course antonio argued there is quite a lot of evidence for i think that there is a need for international uh regulation also uh because most of the strongest regulators are in the developed countries and as moritz himself told me uh in the developed countries have been very few downgrade during the covid crisis because the regulators have informally or even in the press told uh told rating agencies not to downgrade developers but there hasn't been that kind of influence by regulators in developing countries because they're much weaker and their influence is much smaller on on the rating agents which are all of course based in the north and particularly in the u.s so i think the case for both or either regulating tightly these important agents and all having an international public agency that also does rating is a complement particularly for the long term as we said in the paper with moritz i think would play an important role in reducing uh in facilitating debt relief particularly with the private craves because if not there is this barrier um we can say that that the government should ignore rating but they know that the creditors are looking at it so it's very difficult for them to ignore so i think i think this is an area for for further study and i think it's very important that the united nations for example is taking um at a high level is taking a lot of interest in this thank you thanks a lot thanks a lot stefanie and uh we'll let uly have the last word uh for the webinar and to close us up uh thank you i just would like to to quickly respond to to band ludemann's question regarding the sticks uh first of all i think it's important that we have a credible scenario where the imf and mdbs make clear that they're not going to bail out private creditors so if for the in the case that that that's a sustainability assessment suggests that the country's debt is not sustainable but then beyond that the kind of moralization and and regulatory measures that i alluded to there's actually a rich history of that so during the debt restructuring of the during the brady period in the 1990s um supervisors finance ministries were quite engaged in in getting financial institutions to the table um the imf uh at some point held back emergency financing uh there have been tax incentives there have been uh uh you know there's been pressure uh kind of um as i said moral situation you know kind of um if you don't comply we may come come around for a more more comprehensive uh supervisory analysis and so on so there are ways and and there have been also executive orders uh from from uh US president for example regarding debt restructuring uh in iraq um so there are precedents and and past debt restructurings have have shown that if there is a strong political will from the major advanced countries and then there are ways to to get the private creditors to the table and i hand back to i don't know kevin or stephanie to wrap it up thank you i think alicia i want to make a comment i see very very quick stephanie thank you so much the reason why credit rating agencies for us is such a big issue is because downgradings increases the cost of capital of interest of financing and uh and that's the problem that it's i mean it's done in a moment where i think that's very inappropriate where countries need a lot of support financially and the cost is increasing at the rate of downgrade from the from the credit rating agency so i think it has to be reviewed i agree that maybe not to spend so much time on it and and the second comment very quickly is that i believe that to have a real green recovery package what we need to do is to attach to each of these projects the number of jobs that will be created the number and the quality of jobs this is an exercise we have done in netclad to find out if we go from transitioning electricity to renewables how many jobs could be created of which quality and and and also how much how many emissions could be reduced and we have an exercise that if we invest 1.3 percent in this in this sector electricity we can generate 7 million jobs and we could reduce emissions at 30 per cent per year so we have to do these figures because uh and and these connections it's not only sustainability sustainability attached to equality and the the the master key for equality is jobs that are well paid thank you stephanie thank you very much and thank you for the invitation i truly enjoy the the webinar that's great thanks for all your valuable contributions i don't know if somebody has very urgent uh would like to say something i wonder whether for example louis would like to say something if he's still with us um i am uh i'm still with you but no i'm not adding on anything thanks a lot stephanie and thanks a lot for inviting me thank you very much i don't know what if you want the last word no i'd just like to to thank everyone for for joining and uh we do hope that this will really make a contribution to the discussion and uh we very much believe we need more action on this and and this is uh part of the bigger picture and hopefully uh you'll see uh countries being put in a position where they can really achieve um i i now uh take josé antonio's order um uh an inclusive uh socially just and also green and resilient recovery so thanks so much everyone and i really appreciate