Sovereign nations do not have the protection of bankruptcy laws to restructure or delay their debt repayments in the same way that private debtors do,” UNCTAD secretary general Mukhisa Kituyi said in a news release.
Kituyi issued the statement ahead of a meeting yesterday at the United Nations on sovereign debt restructuring.
Kituyi issued the statement ahead of a meeting yesterday at the United Nations on sovereign debt restructuring.
According to UNCTAD, sovereign debt crises are creating a growing threat to economic stability in many developing countries.
He warned that “while creditors cannot easily seize non-commercial public assets, sovereign debt faults bring major problems in terms of reputation and access to further loans.”
He warned that “while creditors cannot easily seize non-commercial public assets, sovereign debt faults bring major problems in terms of reputation and access to further loans.”
In the past, debt crises have led to highly speculative funds run by non-cooperative or hold-out bankers, including by “vulture funds,” which aggressively pursue debt repayments, rendering them expensive and potentially disruptive.
Since 2000, hedge funds have been the primary plaintiffs in 75 per cent of all litigation cases against sovereign debts.
Since 2000, hedge funds have been the primary plaintiffs in 75 per cent of all litigation cases against sovereign debts.
New research will be published next month in a report, indicating that the latest round of borrowing dates to 2006, when the Seychelles issued a sovereign bond, making it the first sub-Saharan African country to do so in the past 30 years, with the exception of South Africa.
"In the subsequent decade, Angola, the Democratic Republic of the Congo, Côte d’Ivoire, Ethiopia, Gabon, Ghana, Kenya, Namibia, Nigeria, Rwanda, Senegal, Tanzania and Zambia have accrued more than $25 billion in bonds, with a principal amount of more than $35 billion," said UNCTAD.
The report’s researchers, Ingrid Harvold Kvangraven and Aleksandr V. Gevorkyan, say that many African countries are now facing repayment difficulties, pointing to Ghana as an example.
“Ghana is in a difficult, yet unfortunately common position, as it depends on commodity exports such as gold, oil and cocoa,” they said.
“Ghana is in a difficult, yet unfortunately common position, as it depends on commodity exports such as gold, oil and cocoa,” they said.
“With falling commodity prices, the country faces a decline in revenue and a growing current account deficit,” they added, pointing out that Ghana’s total debt, both external and domestic, is more than 55 per cent of its gross domestic product.
Last year, after research contributed by UNCTAD, the UN General Assembly adopted a resolution stating that sovereign debt restructuring processes should be guided by basic international principles of law such as sovereignty, good faith, transparency, legitimacy, equitable treatment and sustainability.
The resolution reflected a growing concern about renewed sovereign debt crises and long-term debt sustainability in the context of continued global economic fragility.
Tanzania issued a $600 million bond through Stanbic Bank in 2013 to raise funds for infrastructure projects.
Tanzania issued a $600 million bond through Stanbic Bank in 2013 to raise funds for infrastructure projects.
The deal was marred by corruption allegations leading to charges against several suspects including the former commissioner general of the Tanzania Revenue Authority (TRA), Harry Kitilya, and former officials of Stanbic Bank Tanzania.
The government is now seeking credit rating that would enable it to issue a debut eurobond worth up to $1 billion.
The government is now seeking credit rating that would enable it to issue a debut eurobond worth up to $1 billion.
Tanzania's total national debt is now hovering near the $20 billion mark, but government officials maintain that it is still within a sustainable range.
According to the government's 2016/17 budget framework, the state plans to spend 8 trillion/- in this fiscal year to service the national debt, equivalent to 27 per cent of the total budget
According to the government's 2016/17 budget framework, the state plans to spend 8 trillion/- in this fiscal year to service the national debt, equivalent to 27 per cent of the total budget
