Share

UN assembly calls for action on national debt

United Nations - The UN General Assembly voted overwhelmingly on Tuesday in favour of a resolution that calls for adoption of a new legal framework to restructure national debts and avoid the kind of speculative action that led Argentina to a second default.

The resolution, proposed by developing countries, was approved by a vote of 124 to 11 with 41 abstentions. The United States voted against it saying such a legal framework would create uncertainty in financial markets.

Argentina's Foreign Minister Hector Timerman hailed the resolution, saying it will create a new system "that respects the majority of creditors and permits countries to emerge from a crisis in a sustainable way."

General Assembly resolutions reflect world opinion but they are not legally binding.

Bolivia's UN Ambassador Sacha Llorenty Soliz, who heads the Group of 77 which represents 132 mainly developing countries, said members will talk to countries that voted against the resolution in hopes of reaching an agreement with them on a framework. It will then return to the General Assembly next year with a new resolution on debt restructuring.

READ: Argentina defaults as talks break down

Argentina was forced into a second default on July 30 following a decade-long legal battle with US investors including hedge funds who refused to accept lower payments for bonds that the South American country defaulted on in 2001.

The investors obtained a US court order, upheld by the Supreme Court, preventing Argentina from making a $539m interest payment on July 30, triggering the second default.

Analysts have warned that the default could derail an already weak Argentine economy.

The resolution adopted on Tuesday notes that sovereign debt crises "are a recurring problem that involves very serious political, economic and social consequences."

It states that the right of any country to restructure its debt "should not be frustrated or impeded by any measure emanating from another state" or by commercial creditors, including hedge funds "which seek to undertake speculative purchases of its distressed debt at deeply discounted rates on secondary markets in order to pursue full payment via litigation."

The resolution notes that private creditors of sovereign debt "are increasingly numerous, anonymous and difficult to coordinate," making restructuring complicated.

It said that since the international financial system doesn't have "a sound legal framework for the orderly and predictable restructuring of sovereign debt," there is a need to create one.

The General Assembly therefore "decides to elaborate and adopt through a process of intergovernmental negotiations ... a multilateral legal framework for sovereign debt restructuring processes."

The resolution said the framework should increase "the efficiency, stability and predictability of the international financial system" and promote economic growth.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.93
+0.0%
Rand - Pound
23.90
+0.0%
Rand - Euro
20.40
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders