Priscilla M. AlmeidaMDG 8 • Target 8D

Deal Comprehensively with developing countries debt

Table of Contents

Effects of national debt

The trade economy

Solutions

World Trade Organization

Doha Development Agenda

Heavily Indebted Poor Countries(HIPC)

Case Study: Turkey

• Decreases possibility and likeliness of receiving credit, and loans from other nations.

• More vulnerable to economic shocks.

What national debt in developing countries really

does.

The Trade Market

Situation

In 2008/2009, the financial crisis caused a drop in the value and quantity of trade for almost all developing countries. LDCs were especially negatively affected by the drop in the international prices of oil and minerals, their main exports.

Multilateral trading system saved the trade economy from depreciating into protectionism.

Debt burdens have eased for developing countries and remain well below historical levels

Main solutions

World Trade Organization

Liberization of developed countries through the Doha Development Agenda benefit developing countries

World Trade Organization

Heavily Indebted Poor Countries(HIPC)

World Trade Organization

The World Trade Organization (WTO) is the international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible, with a level playing field for all its members. It seeks to place developing countries’ needs and interests at the heart of its work programme.

The main goal that concerns the WTO is MDG 8 , building a global partnership for development. However, WTO activities are also relevant to other goals, such as MDG 1, whose aim is to eradicate extreme poverty and hunger. In fact, the MDGs cannot be seen in isolation: they are all interconnected.

World Trade Organization

Goals

Developing countries’ participation in the multilateral trading system

Doha Development Round negotiations, which seek to address some of the imbalances in trade rules that have hindered developing countries’ integration into the global economy

The Aid for Trade initiative, which aims to help developing countries increase their participation in international trade and reap the resulting benefits

Efforts to increase access to affordable medicine in developing countries.

Concentration

The work of the WTO is relevant to achieving a number of the MDGs, but specifically the organization’s core activities fall mainly within the objectives of MDG 8, a global partnership for development. This MDG was born from the recognition that for poorer countries to achieve the other MDGs, it is important to create an international environment that facilitates their attainment by 2015. MDG 8 is therefore an important element in the overall structure of the MDGs. MDG 8 is the precondition for all of these goals to be sustainable in the long run. MDG 8 recognizes that the ability of developing countries to reach sustainable levels of growth often depends on the international environment in which they operate. By acting for a stable, open multilateral trading system, the WTO’s contribution is crucial in building a more favorable global environment for developing countries.

World Trade Organization

Your Guide to MDG 8 Expertise

http://www.wto.org/english/thewto_e/coher_e/mdg_e/mdg_e.pdf

Developing Countries

“The majority of WTO Members are developing countries. We seek to place their needs and interests at the heart of the Work Programme adopted in this Declaration”

Doha Ministerial Declaration, November 2001

Doha Developmental Agreement

Numerous economical benefits.

Benefits in access to the markets of developed countries would be the reduction of tariff peaks in agriculture, textile and clothing and the lowering of market-distorting subsidies in agriculture.

Reducing high tariffs more than proportionally, the Doha agreement would also decrease the widespread ‘escalation’ of tariffs.

The Doha Development Agenda (DDA) talks they placed developing countries’ needs and interests at the heart of the negotiations.

Doha Development Agreement

Ideals

The Doha Round also encompasses services. Services is the dominant economic activity in virtually all countries of the world, and the opening of services trade can provide many opportunities to developing countries.

Enhanced market access opportunities alone will not be sufficient for all these countries to achieve this gain

Aid for trade

The Aid for Trade initiative was launched precisely for this reason. Aid for Trade is essentially about providing financial and technical assistance to developing nations.

Especially the LDCs, to help them build up their supply-side capacity and strengthen their traderelated infrastructure to enable them to produce and trade more. Aid for Trade facilitates the mobilization of international resources to address developing countries’ supply-side constraints and trade-related bottlenecks.

Heavily Indebted Poor Countries(HIPC)

The HIPC program was initiated by the International Monetary Fund and the World Bank in 1996, following extensive lobbying by NGOs and other bodies. It provides debt relief and low-interest loans to cancel or reduce external debt repayments to sustainable levels.

Forty countries are eligible

35 countries have reached ‘Decision point’ in which has saved them $57 billion from debt.

28 countries have reached ‘Completion Point’ and have received further assistance of $25 billion from the multilateral initiative.

Members of the HIPC

Heavily Indebted Poor Countries(HIPC)

Requirements

Countries must meet certain criteria, commit to poverty reduction through policy changes and demonstrate a good track-record over time. The Fund and Bank provide interim debt relief in the initial stage, and when a country meets its commitments, full debt-relief is provided.

Benefits Boosting social spending. Before the HIPC

Initiative, eligible countries were, on average, spending slightly more on debt service than on health and education combined. Now, they have increased markedly their expenditures on health, education, and other social services. On average, such spending is about five times the amount of debt-service payments.

Reducing debt service. For the 36 countries receiving debt relief, debt service paid, on average, has declined by about two percentage points of GDP between 2001 and 2009. Their debt burden is expected to be reduced by about 80 percent after the full delivery of debt relief (including under the MDRI).

Improving public debt management. Debt relief has markedly improved the debt position of post-completion point countries, bringing their debt indicators down below those of other HIPCs or non-HIPCs. However, many remain vulnerable to shocks, particularly those affecting exports as seen during the current global economic crisis. To reduce their debt vulnerabilities decisively, countries need to pursue cautious borrowing policies and strengthen their public debt management.

Turkey and Aiding Debt in poor countries

The amount of Turkey’s ODA to the Least Developed Countries (LDCs) is growing every year.

Turkey’s total ODA increased by 129% from 2004 to 2008, and its ODA to the LDCs rocketed to 187.1 million US Dollars in 2008

Turkey’s Participation in International Development Cooperation has been launched in cooperation with UNDP Turkey and TIKA in 2008. The project aims to increase the capacity of TIKA, which is the primary institution of Turkey’s development cooperation activities, on various issues including aid effectiveness

Turkey has the legal framework to provide ODA to developing and the least developed countries within the framework of financial cooperation

Thank you for your time

Stop national

Debt through

MDG 8 • Target

8D