1. Commercial bank debt

The World Bank definition of net transfers as given in the World Debt Tables 1992 1993 is used in this analysis.

For middle income countries in marked contrast to the case of commercial bank debt the Paris Club currently offers no options that reduce the net present value of debt obligations.

Debt cancellation did not necessarily lead to net flows.

In that study, the net present value of debt servicing was examined under different debt restructuring options.

Japan is a net creditor and largely finances its debt domestically.

The typical bank is capitalized with equity, long term debt, short term debt, and deposits.

Under the international debt strategy for addressing commercial bank debt, progress has been very substantial.

Otherwise, bank runs and debt panics will be rampant.

(iii) Measures for the reduction of commercial bank debt

Figure 2 shows the breakdown between new (net) transfers and debt forgiveness.

The link between sovereign debt and bank debt has to be broken once and for all.

1. Solution to debt problem Joint programme on External Debt Management with UNCTAD and World Bank

16 World Bank, World Debt Tables, 1993 94, p. 7.

There is more than the debt to the World Bank

The International Bank for Reconstruction and Development has experienced net inflows since the beginning of the 1990s and since 2002 the Asian Development Bank, the European Bank for Reconstruction and Development and the Inter American Development Bank have all received net inflows (see table 3).

According to this definition net transfer is disbursements minus total debt service payments.

In the treatment of the debt of countries in debt crisis, international policy has evolved very considerably, particularly as regards commercial bank debt.

In 2007, the mortgage and consumer debt to GDP ratio was more than 90 , compared to 24 for net foreign debt.

51. The success of the international debt strategy lay mainly in defusing the crisis involving commercial bank debt.

For the low income countries that actively participate in the Bank apos s Special Programme for Africa (SPA), the net present value of the debt servicing on all outstanding debt as of the end of 1991 based on scheduled payments was 42 billion.

These terms treat the debt owed by lower middle income countries and do not involve any write off of debt or reduction in net present value of debt servicing.

These debt restructurings and individual country buy backs of debt (in part using grants for that purpose from donor Governments) have generally led to modest net reductions in debt.

Where realistic debt restructuring scenarios indicate capital shortfalls, across the board conversion of bank debt into equity will be necessary.

In all debt distressed countries, arrears on commercial bank debt have had an adverse impact on badly needed trade financing.

Confidence in these major debt problem countries improved correspondingly, and the net transfer was reversed.

38. As in the past, the external debt data used in the preparation of the scale represent debt stock information obtained from World Bank World Debt Tables.

But there remain little new securitization and bank debt offerings without government backup.

Also, it does not formally violate the policy prohibiting World Bank debt relief.

In the case of commercial bank debt, most of the heavily indebted middle income countries had succeeded in restructuring their debt.

Debt sustainability indicators for Haiti are mixed. It is estimated that the debt export ratio in net present value terms is high (187 per cent), suggesting that Haiti's debt is unsustainable.

However, while the net transfer from the African Development Bank (AfDB) and the Asian Development Bank (ADB) was positive, it was negative from the Inter American Development Bank (IDB). 15

Two main options are offered for the treatment of non concessional debt, both of which reduce the net present value of the debt by half.

As regards commercial bank debt, the agreements completed under the Brady plan had brought about a significant reduction in commercial bank debt, and had contributed to improved creditworthiness resulting from domestic economic reforms.

The other option lets creditors restructure the debt at concessional interest rates so that the net present value of the debt servicing payments due on the debt will be reduced by half.

The World Bank receives tapes and diskettes containing external debt statistics (WLDBNK 2) from approximately 20 countries through its Debt Reporting System.

Following that, the restructured bank can be recapitalized by raising new debt and equity.

Those obstacles are, in short, the continuing decline of prices of commodities, the heavy debt burden and debt servicing, negative net financial flows and strengthened protectionism.

This suggests that net private borrowing using debt instruments has been rather small over this recent period.

MACROECONOMIC POLICY QUESTIONS EXTERNAL DEBT CRISIS AND DEVELOPMENT NET TRANSFER OF RESOURCES BETWEEN DEVELOPING AND DEVELOPED COUNTRIES

Construction fund earnings would be applied to the annual debt service requirement, thereby reducing the net annual debt service to be met by the set aside procedure.

The International Bank for Reconstruction and Development in particular has experienced net inflows since the early 1990s.

Only the European Central Bank could implement true socialization of national debt in the eurozone.

Socializing bank debt is both unjust and will result in a future misallocation of resources.

2. Impact of alternative rescheduling terms on the net present value of the debt of selected countries 14