Last July, at the 4th Financing for Development Conference (FfD4) in Sevilla, UN member states committed to fully utilise the United Nations Convention Against Corruption (UNCAC) to curb corrupt borrowing and lending, including exploring options to make such contracts unenforceable. Taking place this week in Doha, the 11th session of the UNCAC Conference of the State Parties (CoSP) is the first opportunity to kick off work towards a resolution on predatory and corrupt borrowing and lending.

Read the submission 

Despite the urgency of the debt burden, actions to address corruption in lending practices remain far from sufficient. Information on lending decisions, agreements, allocations, and conditions often remains undisclosed and unchecked by the public and oversight institutions. As an example the World Bank found that less than 25% of countries provide loan-by-loan information on newly signed debt including name of lender, principal amount and financial terms. Certain lenders and borrowing governments conceal debt information by inserting confidentiality clauses in lending agreements, that even hide the existence of the loan itself,  or by failing to establish adequate disclosure mechanisms. When debt is negotiated and managed in secrecy, loan resources are often lost to corruption, undermining investment in the Sustainable Development Goals, climate action and triggering fiscal crises. Debt transparency and accountability is a crucial preventive measure to ensure resources are well spent and to foster responsible lending and borrowing. A powerful preventive measure for lending and borrowing on secret, corrupt, usurious or exploitative terms would be to make such contracts unenforceable. It would protect transparent borrowers and lenders and prevent this type of lending. 

— Kjetil Abildsnes, Senior Policy Advocacy Officer - Debt Justice at Eurodad

 

Read the full intervention delivered at the 11th UNCAC CoSP