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Development Account Projects

Building the capacity of policymakers in developing countries to address regulatory and institutional gaps in the field of sovereign debt governance

Background:

The UNCTAD initiative in the field of sovereign debt has revealed that policymakers in some developing countries need technical assistance to improve their regulatory and institutional settings with respect to sovereign lending and borrowing. Issues relating to poor governance stemming from a lack of transparency and unclear responsibilities in the debt contracting process are generally at the heart of the problem.

At the end of 2009, UNCTAD launched an initiative to promote responsible sovereign lending and borrowing. In cooperation with an expert group composed of world-renowned professionals and academics in the area of debt and development finance, UNCTAD has successfully formulated a set of principles to guide responsible sovereign lending and borrowing practices. The principles are intended to establish clear responsibilities on the part of both borrowers and lenders with the aim of reducing the prevalence of sovereign debt crises and promoting sustained economic growth. The principles have been broadly welcomed by Member States and other stakeholders, including the Paris Club, multilateral financial institutions and civil society. In addition, the principles have begun to receive public endorsements from Member States, which thus far include 13 countries at varying levels of economic development.

During the consultations with Member States leading up to the endorsement process, it became evident that certain countries would require assistance in designing and/or adapting their regulatory (and institutional) frameworks for the implementation of the responsible practices outlined in the principles. Some of the countries enquired whether UNCTAD would be able to provide additional assistance in this matter.

The goal of the project is to increase the capacity of policymakers at the regulatory and political levels to design and implement policies that foster responsible practices in the field of sovereign debt governance through the adaptation of their regulatory and institutional frameworks. The tentative list of beneficiary countries includes the countries that have provided official support for the UNCTAD principles on responsible sovereign lending and borrowing and have requested technical assistance. The list tentatively includes Gabon, Honduras (or Colombia), Indonesia (or the Philippines), Morocco and Nepal.

The project will build on existing relationships with regional banks (e.g., the Islamic Development Bank and the Asian Development Bank) and with the United Nations Development Programme (UNDP) in order to obtain assistance with the organization of workshops at the regional level. In addition, the partners will provide inputs such as contacts, technical support and background documents. .

Objective:

To improve the capacity of selected countries to design, adapt and implement institutional and regulatory frameworks that foster responsible practices in the field of sovereign debt governance

Expected accomplishments:

  • Improved understanding and capacity of policymakers in beneficiary countries for the identification of regulatory and institutional gaps in the field of sovereign debt governance
  • Improved capacity of beneficiary countries to address the regulatory and institutional gaps identified in the field of sovereign debt governance, through policies and instruments on responsible lending and borrowing

Implementation status:

Summary of the progress report for 2014:

 

The following activities have taken place

  • The background documents for workshops to be undertaken in 2015-2017 have been developed;
  • A consultant was hired to work on the development of an Assessment Framework. The documents produced were presented to a group of experts in sovereign debt matters in New York in July 2014;
  • Following the expert group meeting, guidelines on Responsible Sovereign Lending and Borrowing were released;
  • In September/October 2014, the target countries (Haiti, Mauritania, Togo, Nepal and Bangladesh) confirmed participation in the project. Official letters of agreement were received in December 2014;
  • UNCTAD secretariat has been working on producing a background document for the second workshop related to capacity building on sovereign debt regulatory and institutional issues. The document is based on the Guidelines on Responsible Sovereign Lending and Borrowing.