The issue of pursuing and adopting responsible sovereign financing is at the core of any sustainable development strategy. In the absence of such, any development strategy would be undermined by the damage done by a sovereign default or debt crisis. 

Experience shows that the effects of such crises are not borne by the borrowing country alone.  In the past, contagion effects have carried adverse consequences for other countries as confidence is undermined, capital is withdrawn and liquidity dries up. 

Heightened interest in establishing responsible lending and borrowing practices has been expressed by lenders and borrowers in recent years. This has been reinforced by the belief that enhanced and more responsible practices can prevent undesirable consequences.

Interest in this issue has been fuelled by borrowers and lenders. Borrowers, especially from developing countries, have brought the issue to the fore by questioning lending motives and the use of borrowed funds by previous governments. However, there is a shared recognition by all for the need to maintain the sanctity of debt contracts.

At present no universally agreed principles to guide responsible sovereign lending and borrowing exist.   There are widely differing views among stakeholders, including civil society of what constitutes responsible practices.  An approach which can be part of an international consensus is therefore needed.  The project therefore aims to build consensus around a set of guidelines to promote responsible sovereign lending and borrowing.