This implies a deceleration of the growth rate of public indebtedness.

The inflation pessimists worry that the government will actually choose a policy of faster price growth to reduce the real value of the government debt. But such a strategy can work only in countries where the duration of the government s debt is long and the interest rate on that debt is fixed.

Given that the assets and liabilities of the Fund are expressed in United States dollars, it is appropriate to develop the assumptions by reference to yields available on United States long term Government Bonds.

41. In measuring an environmental liability based on the present value approach, the discount rate used to measure present value would be a risk free rate, such as that used for a government security that has a similar term.

The liabilities were valued on the basis of a discount rate of 5.5 per cent.

But governments and investors know this, and the result has been much higher debt to GDP ratios than would have been possible under the gold standard. The eurozone as a whole has a debt to GDP ratio of 90 , which is high by any standard.

Such rates currently prevail in the eurozone, Switzerland, Denmark, and Sweden. And it is not just short term policy rates that are now negative in nominal terms about 3 trillion of assets in Europe and Japan, at maturities as long as ten years (in the case of Swiss government bonds), now have negative interest rates.

Options for lower debt burdens on Governments of heavily indebted developing countries include debt cancellation and debt swaps for sustainable development.

7. In mid 1998 the territorial Government was approximately 600 million in debt.

Sixth, rising government debt ratios will eventually lead to increases in real interest rates that may crowd out private spending and even lead to sovereign refinancing risk.

These flows, in turn, will depend inter alia on the effectiveness of measures taken by the international community to alleviate the external debt burden of heavily indebted African countries, which in SSA consists mainly of public and publicly guaranteed long term debt.

(4) where the fund is a reloan of the government or a refundable subsidy, it shall be dealt with as a liability of the enterprise.

36. Africa s external debt burden is the highest among developing countries in terms of the ratio of external debt to GDP and its debt service ratio.

For Greece, with an overall deficit of 4.1 of GDP and a debt GDP ratio of 170 , the debt ratio would fall if the combination of inflation and real (inflation adjusted) GDP growth exceeded 2.4 . Stated differently, now that Greece has achieved a zero primary budget deficit, its debt burden will decline if its nominal growth rate exceeds the average interest that it pays on its government debt.

Though interest rates across the European Union are at historic lows, government debt in the eurozone could come under severe pressure should bond markets re evaluate the riskiness of sovereign borrowers. That is a consideration that should weigh heavily on indebted governments as they submit their budgets for scrutiny to the European Commission.

But won t an increasingly indebted government have to pay ever higher interest rates, so that debt service costs eventually consume its entire revenue? The answer is no the central bank can print enough extra money to hold down the cost of government debt.

A Balance Sheet Approach to Fiscal Policy

(b) the estimated long term rate of inflation used in computing the liability

Cleaning up high private sector debt and lowering public debt ratios by growth alone is particularly hard if a balance sheet crisis leads to an anemic recovery. And reducing debt ratios by saving more leads to the paradox of thrift too fast an increase in savings deepens the recession and makes debt ratios even worse.

NEW HAVEN The prices of long term government bonds have been running very high in recent years (that is, their yields have been very low). In the United States, the 30 year Treasury bond yield reached a record low (since the Federal Reserve series began in 1972) of 2.25 on January 30.

Liberia apos s external debt to international financial institutions and other external creditors, inherited from previous Governments, imposes a huge burden on my Government.

Article 24 The Company shall present the ending balance, beginning balance and percentage increase or decrease of the following financial status indicators asset liability ratio, net asset liability ratio and liquidity ratio in tabular form.

Article 75 The Company shall present the ending balance, beginning balance (prior year) and percentage increase or decrease of the following financial status indicators in tabular form asset liability ratio, net asset liability ratio and liquidity ratio.

At the balance sheet date, all asset and liability balances are revalued using the United Nations official exchange rate as at 31 December.

Governments, too, are shedding labor particularly governments burdened by high deficits and debts. And, by transforming how services are provided to the public, the e government trend can offset the employment losses with productivity gains.

Moreover, the Greek government s interest payments are exceptionally low. Given that its debt will still be about 170 of GDP this year, the 4.1 of GDP interest bill implies that the Greek government pays an average interest rate of just 2.4 far less than the nearly 9 rate that the market is now charging on ten year Greek government bonds.

Similarly, in guaranteeing the debt of Irish banks in September 2008, the Irish government did something that no responsible government should have contemplated. It took responsibility for obligations that amounted to a multiple of Ireland s national income, driving up government debt to more than 1,300 of GDP.

They buttress their argument that the deficit is not an immediate problem by pointing to very low interest rates on long term government debt, with a 2 yield on the ten year Treasury bond and a negative real interest rate on Treasury inflation protected bonds (TIPS). But such low rates do not reflect ordinary market sentiment rather, they stem from the fact that the Federal Reserve is now buying more long term securities than the government is issuing to finance the budget deficit.

I don't know.

For governments with access to today s extremely low and often negative real interest rates, it may seem like a no brainer to borrow and invest more in projects with long term benefits. Doing so would strengthen their balance sheets, crowd in the private sector, and generate employment.

For several of the heavily indebted poor countries the share of government revenues that is devoted to debt servicing is larger than the education and health budget combined.

Debt service coverage and bond interest

But it is not the only obstacle. A debt pooling scheme must also address the fact that the strongest countries will inevitably face higher interest rates on their own debts when they become jointly liable for the debts of less credit worthy governments.

My Petersen Institute colleague Carmen Reinhardt suspects that financial repression will be the main debt reduction method governments will rely on regulation and manipulation to force savers to pay down public debt through negative real returns on their bond investments.

This is not a far fetched scenario, and its realization would play havoc with the budgets of many indebted eurozone member states. Therefore, in assessing member states draft budgets, governments and the Commission would be foolish to assume that low interest rates on government bonds will be around for the foreseeable future.

It may seem appalling to expect such a highly indebted country to continue to run deficits but the world is willing to finance the US at negative real interest rates. Indeed, the main international concern has been US policymakers reluctance to raise the government s debt ceiling!

In addition, given that local government debt comprises 27 of China s 2010 GDP, while central government debt and policy loans stand at 20 and 6 of GDP, respectively, the total public debt to GDP ratio is approximately 53 lower than Germany s. So, while China should not be complacent about local government debt, panic is unwarranted.

In the end, debt relief has a positive impact on a country's balance of payments, as the Government transfers fewer resources to foreign creditors, but does not ease the budgetary burden faced by the Government.

Strictly speaking, zero rates are observed only for nominal, medium term debt that is perceived to be riskless. But, throughout the eurozone, rates are close to zero and negative for a substantial share of government debt and are expected to remain low for quite some time.

In such a situation, the only option available for the Government was to seek debt restructuring to alleviate the debt burden or to have short term cash flow relief.

For the HIPCs, the debt structure is overwhelmingly public and publicly guaranteed, which accounted for 80 per cent of total external debt at end 1996.

But that debt costs only 1 2 of GDP to service, allowing Japan to remain solvent. Likewise, Greece can now manage its public debt burden, which stands at about 175 of GDP, thanks to the ultra low interest rates and long maturities (longer than those on Japan s debt) granted by its European partners.

A needs assessment on asset liability management was carried out in September 1996 for the Government of Morocco (technical assistance project).

...by the authorities in charge. Next.

How did we get here? Once upon a time, conventional wisdom maintained that curbing governments appetite for debt would put an end to over borrowing, because private agents would know to act prudently and weigh the costs and benefits of one more dollar of debt.