Strengthening debt management capacity should be an integral part of this strategy.33

Limited capacity for debt socialization reflects the EU Treaty s no bailout clause, which bars outright mutualization at the eurozone level of (national) public debt.

If governments that have already tapped out their debt bearing capacity now issued more debt or money or guarantees, they would deal a mortal blow to confidence.

The debt burden adjustment should be retained as an element of the scale methodology because external debt had a substantial impact on Member States' capacity to pay.

A long term alternative requires some capacity to write down debt where it has reached excessive levels.

The capacity of developing countries to manage the maturity structure and currency composition of debt needs further improvement.

But delaying the debt reckoning for too long would undermine confidence in the US government s capacity for fiscal discipline.

For the counterpart of the US debt build up was the relocation of much American manufacturing capacity to China.

Saddled with debt, reparations and oil capacity constraints, and with the security situation highly uncertain, Iraq has yet to achieve self sustaining economic growth despite the reduction in Paris Club debt.

This strategy s success presupposes that, in the interim, economic growth will strengthen the capacity to repay debt down the line.

A government s capacity and willingness to service its debt depend on an almost infinite number of present and future contingencies.

The debt burden adjustment was an integral part of the scale methodology, for external debt not only affected a country's capacity to pay but also placed a significant burden on its economy.

Efforts should be made to strengthen the capacity of developing countries to manage their debt, because growth, human development and the achievement of the Millennium Development Goals depended on maintaining sustainable debt levels.

27. Invites the international community, including the United Nations system, to continue efforts to increase financial support in respect of capacity building activities for developing countries in the area of debt management and debt sustainability, and encourages countries to create transparent and accountable debt management systems

But if a government s debt emissions exceed its debt capacity, all of that government s debt will become risky. It will have relieved a shortage of longer term assets by creating a shortage of high quality assets, and so be in a worse position than it was before.

This does not mean that official funding should be junior to private debt in any restructuring, for that would require substantially more loss bearing capacity from the official sector capacity that is probably not available.

At the very least, the combination of higher interest rates in the shadow banking sector and weaker nominal GDP growth undermines borrowers debt repayment capacity.

The equivalent for Greece would be to index payments to its rate of GDP growth, thereby automatically adjusting Greece s debt burden to its payment capacity.

The cost of fully covering IMF debt stock relief, without undermining the Fund's financing capacity, should be met by the use of existing IMF resources.

To that end, President Hu Jintao had announced at the recent summit new measures in five areas finance, debt, trade, capacity building and public health.

Instead, they focused exclusively on US foreign debt, ignoring household debt (mortgage and consumer debt), public debt, business debt, and financial debt.

The ensuing massive bank bailout, plus continued budget deficits and declining nominal GNP, means that Ireland s debt is ballooning, while its capacity to pay has collapsed.

However, poor countries could not tackle poverty alone, but required increased aid, debt relief, capacity building support and an equitable multilateral trading system to spur growth.

Several speakers called for donor countries to come to the aid of other States with limited capacity and resources, including through the cancellation of foreign debt.

But this fear is unfounded, because it is based on a misunderstanding. What matters for debt service capacity is the debtors' income, not the general price level.

In principle, governments could bridge the gap, but high (and rising) debt constrains their capacity to do so (though how constrained is a matter of heated debate).

At their eleventh meeting (Maputo, March 2005), the HIPC ministers called for help in building their capacity to analyse debt sustainability and create a framework for action.

In the long run, America s growth pattern must undergo a structural shift from reliance on debt and consumption one based on Americans vaunted capacity for creativity and innovation.

A long term alternative requires some capacity to write down debt where it has reached excessive levels. But it is also necessary to establish an iron clad guarantee of some part of the outstanding debt, in order to remove fear of a complete write down.

Debt sustainability and debt relief

When a local government is no longer able to service its debt, the central government will have to place its own fiscal capacity at risk by assuming the responsibility.

But markets are more pragmatic if, as is almost surely the case, austerity weakens economic growth, and thus undermines the capacity to service debt, interest rates will not fall.

In sum, there are tradeoffs. Too much short term debt makes banks more prone to failure, while too much equity places little restraint on bankers capacity to destroy value.

More debt relief encompassing more countries and more debt (including bilateral debt) is needed.

Politics aside, property bubbles leave in their wake a legacy of debt and excess capacity in real estate that is not easily rectified especially when politically connected banks resist restructuring mortgages.

Ethiopia had significantly improved its capacity to mobilize domestic financial resources, and welcomed the recent debt cancellation for heavily indebted poor countries and the setting of timetables to reach ODA targets.

Unsustainable private debt problems must be resolved by defaults, debt reductions, and conversion of debt into equity.

This enabled a consumption binge, which meant that debt was created without a corresponding asset, and encouraged excessive investment in real estate, resulting in excess capacity that will take years to eliminate.

Debt

(d) Welcome the initiative of several countries on the moratorium of payments of the external debt of the affected countries to augment their national capacity to carry out the rehabilitation and reconstruction efforts

The Chairperson, speaking in her capacity as an expert, asked whether funds freed up by debt cancellation initiatives for least developed countries had been used to improve the education of women and girls.

The country simply cannot keep on piling debt upon 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.

Policymakers can manage these perceptions by improving public sector governance, ensuring sound macroeconomic management, promoting a transparent and supportive legal framework for private sector activity, building debt management capacity, and protecting investors from expropriation.

The demand for debt repayment confronts the philosophy of debt forgiveness.