Joint CSO letter on UN GA Resolution vote on “Basic Principles on Sovereign Debt Restructuring Processes”
On September 10th the international community must take an important step towards better prevention and resolution of sovereign debt crises. Adoption of the UN General Assembly Resolution “Basic Principles on Sovereign Debt Restructuring Processes” would be a milestone towards ensuring that debt crises can be tackled in a timely, orderly, effective and fair manner. As a Europe-wide and international coalition of civil society organisations working on debt justice, we urge you to vote in favour of this Resolution.
Effective debt restructuring processes are essential to secure development progress and poverty eradication. This has been acknowledged in central United Nations agreements, most recently in the Addis Ababa Action Agenda and the 2030 Agenda for Sustainable Development. The vote on this Resolution (A/69/L.84) is the first litmus test for the implementation of these crucial agreements. Adoption of the Resolution is an important signal if UN Member States stand ready to turn political agreements into practical change. We hope that Europe will act in this constructive spirit.
We are particularly concerned by the ability of vulture funds to sabotage debt restructuring processes through aggressive litigation. The lack of an effective debt restructuring framework is increasing the burden and costs of debt restructurings to the public, because of bailout loans being used to pay off private creditors. This recently included European taxpayers in the case of Greece. We expect that our political leadership takes the necessary steps to ensure that taxpayers’ money – in some cases scarce ODA – is no longer used to pay vulture funds and consider the adoption of this Resolution as an essential step in this regard. By indicating that reckless lenders will no longer be bailed out, a more effective debt restructuring framework will also promote responsible lending and borrowing and therefore prevent crises occurring in the first place.
Previous periods of debt crises in different world regions have proved that, due to the shortcomings of the current regime, debt restructurings are initiated too late and are often insufficient to lead to sustainable outcomes. The consequences are unnecessary economic costs, welfare losses and human suffering for the citizens of the countries impacted and the international community as a whole.
As the debt indicators of many countries are currently worsening quickly, including in former HIPC countries, it is of utmost importance to undertake the necessary reforms before the next wave of debt crises strikes. Therefore, we also urge you to work intensively with partner countries during the
70th Session of the General Assembly to reach an agreement on the modalities for further international negotiations aiming to create better debt workout institutions for the prevention of, and sustainable solution to, debt crises.
11.11.11, ActionAid International, Afrodad, Alliance SUD, Both ENDS, Bretton Woods Project, Brot für die Welt, Cartel ALFA, Central and Eastern Euopean Bankwatch Network, Center of Concern, Christian Aid, Coopération Internationale pour le Développement et la Solidarité (CIDSE), CNCD/11.11.11, Diakonia Sweden, Debt and Development Coalition Ireland, Debt Relief International, Ekumenická Akademie Praha, Ekvilib, Erlassjahr, Eurodad, Global Justice Now, Global Policy Forum, IBIS Denmark, Institut Globalnej Odpowiedzialnosci (IGO), International Trade Union Confederation, Jubilee Australia, Jubileo Bolivia, Jubilee Debt Campaign UK, Jubilee Scotland, KOO, Latindadd, National Justice and Peace Network, Norwegian Church Aid, Norwegian Debt Justice Network (SLUG), Norwegian Forum for Environment and Development, Observatori del Deute en la Globalització (ODG), Save the Children, Trocaire