Risk Moment RES

Each year, UNCTAD prepares on behalf of the United Nations Secretary-General his report to the General Assembly on “Recent Developments in External Debt”. This report reviews recent development in the external debt of developing countries and highlights future challenges and opportunities in this field. The most recent report (A/62/151) analyzed the phenomenon of reverse capital flows (from developing to developed countries), discussed the role of new borrowing strategies and new debt instruments, and reviewed progress in the Highly Indebted Poor Countries (HIPC) initiative and developments in Paris Club rescheduling. It also highlighted several issues related to the debt sustainability framework for low- and middle-income countries, and discusses potential vulnerabilities arising from the increasingly important role of structured finance.

With respect to the vulnerabilities of structured finance, a recent UNCTAD secretariat note examines the financial turmoil that affected several developed countries since the summer of 2007. In this paper, (TD/B/54/CRP.2) UNCTAD highlights several problems with securitization and with the role of credit rating agencies. The role of credit rating agencies and their effect on the market for developing countries debt have also been analyzed in a forthcoming UNCTAD discussion paper. Other recent areas of research include a legal examination of the concept of odious debt in international public law (UNCTAD/OSG/DP/2007/4).

Analysis of public debt in developing countries has traditionally focused on external debt. However, one of the most interesting trends in public debt management in developing countries is the switch from external to domestic borrowing. UNCTAD has been proactive in collecting information and conducting research on these new developments, which will be discussed in several forthcoming papers.

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