2019 Statement by the Co-Chairmen on Behalf of the Group of Trustees of the Principles

October 31, 2019

Dr. Yi Gang, Governor, People's Bank of China
Mr. François Villeroy de Galhau, Governor, Banque de France
Dr. Axel Weber, Chairman of the Board of Directors, UBS Group AG

Members of the Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring meet once a year to review the progress being made on the implementation of the Principles within the framework of the international financial architecture.

The Trustees discussed the 2019 Report on the Implementation of the Principles presented to them by the Principles Consultative Group (PCG), which includes senior officials from emerging and mature market economies as well as senior bankers, investors and sovereign debt experts. The Trustees noted the significant build up in debt vulnerabilities globally against the backdrop of slowing global growth and increasing economic policy uncertainty. Debt sustainability is already at risk for some vulnerable low-income countries: for example, among the 36 countries that benefitted from debt relief under the 1996 Heavily Indebted Poor Country (HIPC) Initiative and the 2005 Multilateral Debt Relief Initiative (MDRI), total external and government debt have now reached their highest levels since 2005. The Trustees discussed country cases including Congo and Mozambique that highlight these risks, as well as Venezuela, Argentina and Barbados, observing that the composition of debt owed by many emerging and developing countries is becoming more complex, particularly given the rise in non-concessional debt and collateralized financing practices. A more diversified creditor base now includes a more varied spectrum of commercial lenders and new official creditors. Therefore, the Trustees highlight the importance of the voluntary guidelines underlying the Principles related to the importance of transparency, information disclosure and cooperation for early crisis prevention.

In this context, the Trustees also received an update on the private sector Voluntary Principles for Debt Transparency. They welcomed the G20 support expressed for the work on these new Principles in the Fukuoka and Osaka Communiques this year: “We support the work of the Institute of International Finance on the Voluntary Principles for Debt Transparency to improve debt transparency and sustainability of private financing and look forward to follow up.” The Trustees offered guidance on the road ahead for the Voluntary Principles for Debt Transparency, and commended the progress made both by the Debt Transparency Working Group (DTWG) and by the Joint IFI/IIF Working Group on Operationalization of the Principles, including on identification of criteria and funding alternatives for a data repository. The Trustees urged the DTWG and the Joint IFI/IIF Working Group to collaborate closely and move quickly to provide the best possible framework for the new Principles.

Recognizing the voluntary nature of the Principles, the Trustees believe that once successfully implemented, the new Debt Transparency Principles will signal significant progress in sovereign debt markets and a notable change in current market practices. Greater transparency in sovereign debt markets is clearly consistent with the existing Principles for Stable Capital Flows, which highlight transparency as a foundational principle for both crisis prevention and crisis resolution. Therefore, it is envisaged that these Voluntary Principles for Debt Transparency should fall under the governance of the 2004 Principles and be overseen by the Group of Trustees. The Trustees agreed to consider different modalities for effective governance and advise the DTWG and the Joint IFI/IIF Working Group accordingly.