Interest rates on government debt are still low.

Government debt service has in general become easier, owing to low interest rates.

Spain and Ireland had fiscal surpluses and low debt GDP ratios before the crisis.

The question of debt sustainability analysis is also key to the resolution of the debt crisis of other low and middle income countries.

But domestic savings remain low in the face of persistently high levels of public debt.

This week, such government debt paid around 3.2 , which is very low by historical standards.

In general, the Gulf Cooperation Council countries maintain low or modest external debt stocks and debt to GDP ratios and have accumulated substantial foreign assets.

The current government has pursued tight fiscal policies, resulting in balanced budgets and low public debt.

And, as Reinhart and Rogoff say, a correlation between high debt and low growth is a sign that one should investigate whether debt is a risk.

This requires consistent macroeconomic policies focused on economic integration, food self sufficiency, low inflation, and reduced debt.

Low interest rates mean that the additional debt burdens that public borrowing will create can remain manageable.

China s investment in US government securities and other sovereign debt will continue to yield extremely low returns.

Progress also needed to be made on extending external debt cancellation to low and middle income countries.

Greece overspent, but Spain and Ireland had fiscal surpluses and low debt to GDP ratios before the crisis.

This year, the Group of Eight countries have pledged increased aid and debt cancellation for low income countries.

Low or negative population growth also implies lower potential economic growth and therefore worse debt to GDP dynamics and increasingly grave doubts about the sustainability of public sector debt.

Another priority is to ensure that low income countries that are striving to meet the MDG s, and which have large financing requirements, avoid a new spiral of indebtedness. The gains from MDRI debt relief will amount to precious little if low income countries emerge from their debt burdens only to start the cycle anew by amassing fresh debt.

So, how much room is left in the relationship between debt and economic performance for a country with low interest rates, low inflation, buoyant stock prices, and healthy prior growth?

Their cash balances are extremely high, interest payments on debt are low, and principal obligations have been termed out.

Their sound financial systems, strong fiscal frameworks, low public debt, and strict adherence to inflation targets give them credibility.

So far, the country has not experienced a debt crisis, and interest rates remain exceptionally low, at around 1 .

Weak labor markets, low inflation, and debt overhang suggest that a fundamental re ordering of priorities is in order.

Action on debt relief and trade reform to benefit low income countries should also reflect the Millennium Development Goals.

The Panel strongly supports the proposal that all debt should be cancelled, in any event for all low income countries.

Many African countries have used the past decade to put in place sound and sustainable economic policies that have delivered robust growth and low inflation. Together with debt relief, these policies have resulted in low levels of public debt, relatively sound financial systems, and most important rising living standards.

Latin America s low personal debt levels have created an opportunity to build a constructive culture of borrowing while expanding economic opportunity.

Indeed, some emerging markets for example, Colombia had been issuing public debt at record low interest rate spreads over US treasuries.

18 See IMF Debt Sustainability in Low Income Countries Further Considerations on an Operational Framework and Policy Implications, 10 September 2004.

Such initiatives should include efforts by IMF and the World Bank to develop a debt sustainability framework for low income countries.

To reverse this trend, the international community must address debt sustainability in highly indebted and low income countries, particularly in Africa.

A reformed United Nations system must, therefore, devise special mechanisms to reduce the debt burdens of low and middle income countries.

Indeed, the implementation of the Multilateral Debt Relief initiated by the G 8 already provides an unprecedented opportunity to complete the process of debt relief for a large number of low income countries.

Accordingly, the Panel recommends a 100 per cent debt cancellation for all low income countries, including those not eligible for debt relief under the HIPC initiative, and significant relief for middle income countries.

But, with the current low rate of household saving, the cycle of rising deficits and debt will soon make national saving negative.

As the crisis gathered pace, Ukraine was completely cut off from international financial markets, despite sound public finances and low foreign debt.

The polarization of borrowing costs has politically explosive distributional effects Germany is borrowing and refinancing its existing debt at artificially low interest rates.

An asset diet rich in equities and direct investment and low in debt cannot substitute for other elements of fiscal and financial health.

Regardless of how they handle their current difficulties, Europe and America will emerge with high debt, low growth rates, and contentious domestic politics.

Savvy investors, like frustrated voters, recognize that low growth and high unemployment actually enlarge deficits and add to debt in the short run.

Since 1999, the poverty reduction strategy papers have become the overall framework for lending, debt relief and development cooperation in low income countries.

The European Central Bank s outright monetary transactions program though conditional, limited to short term government debt, and so far unused appears to have stabilized eurozone sovereign debt markets, albeit in a low or zero growth environment.

What the market is saying is not that the economy has too much debt, but that it has too much private debt, which is why prices of corporate bonds are low and firms find financing expensive.

16. We are also determined to deal comprehensively and effectively with the debt problems of low and middle income developing countries, through various national and international measures designed to make their debt sustainable in the long term.

Those that do relatively well share three characteristics low levels of public debt, limited dependence on exports or capital flows, and robust democratic institutions.

Regrettably, those efforts are being hampered by limited access to the markets of developed countries, low disbursements of development assistance and the debt burden.