News Excerpt
The UNCTAD in its recent Trade and Development Report (TDR) called for a global debt deal for the developing world and underlined the vital need for decisive action to provide substantive debt relief to developing countries to free up sorely needed resources to respond to the raging pandemic of COVID-19.

Pre-Connect
•    UNCTAD is a permanent intergovernmental body established by the United Nations General Assembly in 1964. Its headquarters is located in Geneva, Switzerland, and it has offices in New York and Addis Ababa.
•    UNCTAD is part of the UN Secretariat. It reports to the UN General Assembly and the Economic and Social Council but has its own membership, leadership, and budget. It is also a part of the United Nations Development Group.
•    It supports developing countries to access the benefits of a globalized economy more fairly and effectively and helps equip them to deal with the potential drawbacks of greater economic integration.
•    It provides analysis, facilitates consensus-building, and offers technical assistance. This helps developing countries to use trade, investment, finance, and technology as vehicles for inclusive and sustainable development.
•    It also support implementation of Financing for Development, as mandated by the global community in the 2015 Addis Ababa Agenda, together with four other major institutional stakeholders: the World Bank, the International Monetary Fund, the World Trade Organization, and the United Nations Development Programme.
•    It releases Trade and Development Report (TDR), world investment report, etc. every year.

Highlights
    In its report UNCTAD said that Developing countries’ repayments on their public external debt alone will soar between $2.6 trillion and $3.4 trillion in 2020 and 2021 due to the COVID-19 pandemic.
    It further stressed the requirement of a new international body to oversee developing country debt relief programmes.
    The TDR has stressed that the pandemic has hit developing countries at a time when they have already been struggling with unsustainable debt burdens for many years as well as with rising health and economic needs.
    In March, 2020 the UNCTAD called for a $2.5 trillion coronavirus crisis package for developing countries. Even prior to the COVID-19 crisis, many of these countries faced high and rising shares of their government revenues going to debt repayments, squeezing health and social expenditures.
    The financial turmoil from the crisis has triggered record portfolio capital outflows from emerging economies and sharp currency devaluations in developing countries, making servicing their debts more onerous
    The latest report outlined three key steps:
○    Automatic temporary standstill: This would provide macroeconomic “breathing space” for all crisis-stricken developing countries requesting forbearance to free up resources, normally dedicated to servicing external sovereign debt
○    Debt relief and restructure programmes: This would ensure the “breathing space” gained under the first step is used to reassess longer-term developing country debt sustainability, on a case-by-case basis.
○    International developing country debt authority (IDCDA): For proper implementation of the above two steps, the UNCTAD report proposes the establishment of an International Developing Country Debt Authority (IDCDA) to oversee their implementation and lay the institutional and regulatory foundations for a more permanent international framework to guide sovereign debt restructuring in future.

Way Forward
 A decisive action to provide substantive debt relief to developing countries which are hit badly by the pandemic is the need of the hour. The above three steps could ensure that the world will not face financial turmoil from the crisis. Setting up an autonomous international organisation by way of an international treaty between concerned states is a right step forward. Essential to any such international agreement would be the swift establishment of an advisory body of experts with the entire independence of any creditor or debtor interests.

PEPPER IT WITH
World Investment Report, Global Financial Stability Report