Explanation of Position on a Second Committee Resolution on External Debt Sustainability and Development

Jenni Kennedy
U.S. Adviser to the Second Committee
New York, New York
November 22, 2022


Thank you, Madam Chair. I would like to warmly thank the facilitator of this resolution. The United States is pleased to join consensus.

We reiterate that debt transparency — including public debt disclosure — is critical to maximize the benefits of Common Framework debt relief, promote debt sustainability, and allow for fair burden sharing.

Regarding the references to non-cooperative minority bondholders in OPs 28 and 29, we note that the ability of such bondholders to block a deal is permitted by law in the covenants agreed to by the issuer. As such, we believe it is outside the scope of a UN resolution to express concern about the enforceability of contracts.

Regarding the references to debt swaps in PP18 and OP26, we note that debt swaps, in an appropriate context, may be useful tools for supporting certain policy goals. It is important, however, to clearly distinguish between attempts to use debt swaps to achieve policy goals versus attempts to use debt swaps to address debt-sustainability issues. Debt swaps are generally weak and inappropriate tools to address fundamental debt-sustainability issues. Debt swaps cannot resolve large scale debt crises, nor can they replace reform-backed IMF programs and debt treatments designed to restore long-run debt sustainability in specific cases. To be clear, we emphasize that we do not support the usage of debt swaps to address debt-sustainability issues, and we do not recognize this language as indicating our support for such.

Regarding the references to debt relief and debt restructuring in OP21(b), we emphasize the purpose of debt treatments is the fundamental restoration of debt sustainability in unsustainable debt situations. It is not to finance ad hoc policy initiatives, including the Sustainable Development Goals, even if providing additional fiscal space, thereby allowing additional policy spending, is a secondary effect of debt treatments. We do not recognize this language as indicating the United States’ support for the usage of debt treatments for purposes other than the restoration of debt sustainability.

Finally, we refer you to our general statement, delivered on November 21 for more information regarding our positions on Special Drawing Rights, trade, technology transfer, and the Sendai Framework.

I thank you.