October 22, 2008

OSLO, Norway/GENEVA – The Norwegian government has affirmed its continued support for efforts that address the causes and consequences of debt and the burden it places on countries and development.

Delivering the keynote address at the International Symposium on Illegitimate Debt taking place in Oslo, Norway, 21-23 October, the country's Deputy Minister for Finance Mr Roger Schjerva underlined the government would continue to seek "to be a leading force for debt cancellation" through existing and new multilateral mechanisms. He urged further engagement by other creditor nations and by debtor governments in the illegitimate debt debate, saying "developing countries are in a unique position" to contribute to multilateral fora on the debt issue.

Key international stakeholders including governments, academicians, civil society and multilateral organizations are attending the three-day meeting convened jointly by the Lutheran World Federation, Church of Sweden and Norwegian Church Aid.

Schjerva outlined Norway's support for debt cancellation initiatives such as the Heavily Indebted Poor Countries Initiative (HIPC), the Multilateral Debt Relief Initiative (MDRI), and its role in encouraging responsible and sustainable lending through the Organization for Economic Co-operation and Development (OECD), as well as its significant contribution to the United Nation's work to build debt management capacity in poor countries.

He said Norway considered its financial support for studies on the "odious debt" doctrine by the World Bank and UN Conference on Trade and Development (UNCTAD) as a first step toward translating these ideas into practical policies and building international support. The country's unilateral action in 2006 to cancel debts from five developing countries was an acknowledgement of its co-responsibility as creditor.

The deputy minster noted that while most global debts contracted by governments were uncomplicated, some were problematic, thus the need to study the past, present and future circumstances in considering debt and its legitimacy. Citing the case of South Africa's apartheid regime, he questioned whether the country's people today should pay for loans contracted by a small minority to finance oppression of the majority. Similar questions should be asked of loans during the Cold War period given by superpowers to support dictatorships and fight proxy wars, said Schjerva.

While debt legitimacy should be questioned, it was also important to consider a country's ability to repay including the amounts of resources that debt servicing would divert from development and poverty reduction. The emergence of developing countries as bilateral creditors also needs to be considered in the future processes of encouraging responsible lending practices.

The Norwegian minister said the notion of illegitimate debt raised dilemmas about criteria for deciding the legitimacy of projects and regimes; ensuring debt cancellation did not dry out credit markets for developing countries; and how further gains could be made without threatening the progress of existing initiatives. The notion also called for further discussion about legitimate and efficient conditionalities and where the limited resources should best be spent.

Schjerva commended the convening of a variety of key international stakeholders as an important step in moving forward the debt discussion. He expressed his hope for a world where state debt could be handled through transparent and fair multilateral mechanisms, "where debtors and creditors take joint responsibility for debts incurred ... [and] where responsible lending and risk sharing practices are the order of the day."

Lutheran World Information