Background Papers General Assembly

Topic A:

External Debt, Sustainability and Development.

External Debt

External debt refers to the portion of a country's debt that was borrowed from foreign lenders including commercial banks, governments or international financial institutions. These loans, including interest, must usually be paid in the currency in which the loan was made. In order to earn the needed currency, the borrowing country may sell and export goods to the lender's country.

In the fourth quarter of 2012, the United States had the highest external debt in the world, at nearly US$16 trillion. The United Kingdom was second, at US$10.1 trillion. In 2012, the total external debt of the 49 countries classified as least developed countries increased to an estimated $183 billion, up 6.7 per cent in nominal terms compared to 2011.

What Is a Currency Crisis?

A currency crisis is brought on by a decline in the value of a country's currency. This decline in value negatively affects an economy by creating instabilities in exchange rates, meaning that one unit of the currency no longer buys as much as it used to in another. To simplify the matter, we can say that crises develop as an interaction between investor expectations and what those expectations cause to happen

Question:

You presented an excellently infuriating and easy-to-understand description of how FDR financed recovery from the depression, not by taxing the wealthy but by borrowing their money and paying them 4% to repair the damage that they themselves had caused.

Answer:
By means of debt, governments could:
(1) maintain more or less generous mass public services without the heavy taxes on the masses to pay for them.
(2) simultaneously provide all sorts of supports to business and the rich without taxing them. Moreover, the government sweetened the deal for the corporations and the rich by borrowing from them at interest the money that otherwise likely would have been taxed from them to pay for the government's outlays.

The following countries are ranked as the top 10 countries with external debt:

Rank	Country	External debt US dollar	Date	Per capita US dollars	% of GDP
1	United States	16,737,246,099,998	1 July 2013	52,170	106
2	United Kingdom	10,090,000,000,000	31 December 2012	160,158	406
3	France	5,165,000,000,000	30 June 2011	74,619	182
4	Germany	5,719,000,000,000	30 June 2011	57,755	142
5	Japan	3,024,000,000,000	31 December 2012	19,148	45
6	Netherlands	2,655,489,600,000	30 June 2011	226,503	344
7	Italy	2,460,000,000,000	30 June 2012 est.	36,841	108
8	Ireland	2,163,000,000,000	30 September 2011	512,083	1,008.2
9	Spain	2,290,000,000,000	11 April 2013	18,260	167
10	Luxembourg	2,146,000,000,000	30 June 2011	3,696,467	3,443
29	Mexico	352,900,000,000	31 December 2012 est.	1,956	20

United States:

$14.71 trillion (30 June 2011)

$13.98 trillion (30 June 2010)

The government actually pays more than $1 billion a day in interest on its debts - and spends $10 billion a day on doing government stuff.

United Kingdom:

$9.836 trillion (30 June 2011)

$8.981 trillion (30 June 2010)

According to National Statistics the UK External Debt is £6,290 bn (this is roughly 430% of GDP) (of which only £26bn is owed by General government).

France:

$5.633 trillion (30 June 2011)

$4.698 trillion (30 June 2010)

External Debt in France decreased to 5303542.89 USD (2013)Million from 5370708.74 USD Million (2012). France External Debt averaged 4147251.50 USD Million from 2002 until 2013, reaching an all-time high of 5677713.63 USD Million in June of 2011 and a record low of 1726658.38 USD Million in December of 2002. In France, external debt is a part of the total debt that is owed to creditors outside the country.

Germany:

$5.624 trillion (30 June 2011)

$4.713 trillion (30 June 2010)

External Debt in Germany decreased to 730697 EUR Million (September 2013) from 739560 EUR Million (August 2013). Germany External Debt averaged 255816.57 EUR Million from 1998 until 2013, reaching an all-time high of 922123 EUR Million in August of 2012 and a record low of 60638 EUR Million in May of 2003. In Germany, external debt is a part of the total debt that is owed to creditors outside the country.

Japan:

$2.719 trillion (30 June 2011)

$2.441 trillion (30 September 2010)

External Debt in Japan increased to 267960 JPY Billion in the second quarter of 2013 from 266128 JPY Billion in the first quarter of 2013. From 2003 until 2013, Japan External Debt averaged 196279.7 JPY Billion reaching an all-time high of 267960.0 JPY Billion in June of 2013 and a record low of 141743.0 JPY Billion in September of 2003. In Japan, external debt is a part of the total debt that is owed to creditors outside the country.

Netherlands:

$2.655 trillion (30 June 2011)

$3.733 trillion (31 December 2009)

External Debt in Netherlands decreased to 402084 EUR Million in (August of 2013) from 409039 EUR Million in (July of 2013). Netherlands External Debt averaged 230592.62 EUR Million from 1982 until 2013, reaching an all-time high of 579890 EUR Million in October of 2008 and a record low of 53290 EUR Million in January of 1987. In Netherlands, external debt is a part of the total debt that is owed to creditors outside the country.

Italy:

$2.46 trillion (30 June 2012 est.)

$2.684 trillion (30 June 2011 est.)

External Debt in Italy increased to 749296 EUR Million in the second quarter of 2013 from 737300 EUR Million in the first quarter of 2013. External Debt averaged 708633.84 EUR Million from 2002 until 2013, reaching an all-time high of 838388 EUR Million in March of 2010 and a record low of 524899 EUR Million in December of 2002. In Italy, external debt is a part of the total debt that is owed to creditors outside the country.

Ireland:

$2.352 trillion (30 September 2011)

$2.283 trillion (31 December 2010)

External Debt in Ireland decreased to 1637952 EUR Million in the second quarter of 2013 from 1675829 EUR Million in the first quarter of 2013. Ireland External Debt averaged 1366626.33 EUR Million from 2002 until 2013, reaching an all-time high of 1849903 EUR Million in June of 2010 and a record low of 521792 EUR Million in December of 2002. In Ireland, external debt is a part of the total debt that is owed to creditors outside the country

Spain:

$2.57 trillion (30 June 2011)

$2.166 trillion (30 June 2010)

From 1980 until 2012, Spain Government Debt To GDP averaged 48.4 Percent reaching an all-time high of 84.2 Percent in December of 2012 and a record low of 16.6 Percent in December of 1980. Generally, Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields. In Spain, external debt is a part of the total debt that is owned to creditors outside the country

Luxembourg:

$2.146 trillion (30 June 2011)

$1.892 trillion (30 June 2010)

Government External Debt in Luxembourg decreased to 3969.70 EUR Million in the second quarter of 2013 from 4001.67 EUR Million in the first quarter of 2013. Luxembourg Government External Debt averaged 732.97 EUR Million from 1995 until 2013, reaching an all-time high of 4001.67 EUR Million in March of 2013 and a record low of 0 EUR Million in December of 2004

Mexico:

$217.7 billion (31 December 2012 est.)

$210.9 billion (31 December 2011 est.)

External Debt in Mexico increased to 1616.20 MXN Billion in July of 2013 from 1597.34 MXN Billion in June of 2013. Mexico External Debt averaged 517.64 MXN Billion from 1980 until 2013, reaching an all-time high of 1685.15 MXN Billion in May of 2012 and a record low of 0.70 MXN Billion in January of 1980. In Mexico, external debt is a part of the total debt that is owed to creditors outside the country.

Sustainability

The most sustainable countries in the world are Iceland, Switzerland, Costa Rica, Sweden, Norway, Mauritious, France, Austria, Cuba, and Colombia; at least according to Yale and Columbia Universities. The recently released Environmental Performance Index 2010 is a comprehensive sustainability rating system where 163 countries were judged based on 25 stringent sustainability performance indicators. The outcomes of the research are summarized in this article and each country is discussed in brief to highlight some of the factors that make them the most sustainable countries in the world.

IMPORTANT AGRICULTURAL SUSTAINABILITY

Close to one trillion people in the world do not have sufficient food for a healthy and active life. While much progress has been made towards food security in recent decades, without further urgent and coordinated action, poverty, hunger and malnutrition will continue to undermine the lives of hundreds of millions of people now and in years to come. The world’s population reached 6 billion people in 1999 and is expected to reach 8.5 billion by 2025, when 83% of the world will be living in the South. However, our long-term ability to meet growing demands for food often seems uncertain. Thus, one of our greatest challenges is increasing food production in a sustainable manner so that everyone can be adequately and nutritiously fed without over-exploiting the Earth’s ecosystems. This module introduces the main goals of sustainable agriculture and examines a range of sustainable farming practices and case studies. As such, it develops an understanding of how sustainable farming can both enhance food production and ensure that natural resources are managed in the best way possible for long-term sustainability.

ECONOMIC SUSTAINABILITY

Economic Sustainability is the use of various strategies for employing existing resources optimally so that that a responsible and beneficial balance can be achieved over the longer term. Within a business context, economic sustainability involves using the assorted assets of the company efficiently to allow it to continue functioning profitability over time.

ENVIROMENTAL SUSTAINABILITY

Environmental sustainability involves making decisions and taking action that are in the interests of protecting the natural world, with particular emphasis on preserving the capability of the environment to support human life. It is an important topic at the present time, as people are realizing the full impact that businesses and individuals can have on the environment.
Environmental sustainability is about making responsible decisions that will reduce your business' negative impact on the environment. It is not simply about reducing the amount of waste you produce or using less energy, but is concerned with developing processes that will lead to businesses becoming completely sustainable in the future. Currently, environmental sustainability is a topical issue that receives plenty of attention from the media and from different governmental departments. This is a result of the amount of research going into assessing the impact that human activity can have on the environment. Although the long term implications of this serious issue are not yet fully understood, it is generally agreed that the risk is high enough to merit an immediate response. Businesses are expected to lead in the area of environmental sustainability as they are considered to be the biggest contributors and are also in a position where they can make a significant difference.

Development

A developed country or "more developed country" (MDC), is a sovereign state that has a highly developed economy and advanced technological infrastructure relative to other less developed nations. Most commonly, the criteria for evaluating the degree of economic development are gross domestic product (GDP), the per capita income, level of industrialization, amount of widespread infrastructure and general standard of living. Which criteria are to be used and which countries can be classified as being developed are subjects of debate.

According to the IMF the following 35 economies are classified as "advanced economies":

· Australia

· Austria

· Belgium

· Canada

· Cyprus

· Czech Republic

· Denmark

· Estonia

· Finland

· France

· Germany

· Greece

· South Korea

· Spain

· Sweden

· Switzerland

· Taiwan

· United Kingdom

· United States

The least developed countries (LDCs) are a group of countries that have been classified by the UN as "least developed" in terms of their low gross national income (GNI), their weak human assets and their high degree of economic vulnerability.

List of Least Developed Countries (LDCs)

Africa
Angola	Benin	Burkina Faso	Burundi
Cape Verde	Central African Republic	Chad	Comoros
Congo, Dem. Rep. of the	Djibouti	Equatorial Guinea	Eritrea
Ethiopia	Gambia	Guinea	Guinea-Bissau
Lesotho	Liberia	Madagascar	Malawi
Mali	Mauritania	Mozambique	Niger
Rwanda	Sao Tome and Principe	Senegal	Sierra Leone
Somalia	Sudan	Tanzania	Togo
Uganda	Zambia

Asia
Afghanistan	Bangladesh	Bhutan	Cambodia
Lao PDR	Maldives	Myanmar	Nepal
Timor-Leste	Yemen

Australia and the Pacific
Kiribati	Samoa	Solomon Islands	Tuvalu
Vanuatu

Caribbean
Haiti