New paper: European civil society urges UN-negotiated way out of debt crises
- Call comes as IMF and G20 fail to take action despite worst ever debt crisis in the global south
- New paper published today calls on world leaders to focus on discussing reforms at UN Financing for Development process
This week a new blueprint to reform the global debt architecture has been published, following the failure of the International Monetary Fund (IMF), the World Bank and G20 to take meaningful action.
The paper, titled “UN framework convention on sovereign debt - Building a new debt architecture for economic justice” outlines 10 reforms that European civil society organisations believe are necessary to prevent further unsustainable debt accumulation - particularly in the global south - and to offer fair and sustainable solutions when crises do occur.
It is authored by the European Network on Debt and Development (Eurodad) and is endorsed by 13 other civil society networks and organisations across Europe. It is also the result of discussions with debt justice networks in Africa, Latin America, Asia and North America.
Iolanda Fresnillo, author of the paper and Policy and Advocacy Manager at Eurodad, said: “Today, 3.3 billion people live in countries that spend more on interest payments than on healthcare or education. Reform cannot wait any longer.
“The International Monetary Fund (IMF) and the G20 have so far failed in both preventing and resolving debt problems. Instead of supporting meaningful reforms they have stuck to failed ideas such as the Common Framework for Debt Treatments. Leaders at the IMF and the World Bank are today insisting on the same disastrous recipes from the 80s and 90s debt crises, which led to decades of lost development. Allowing these institutions to continue to lead on international financial architecture reform would amount to the continued repackaging of already failed solutions. Sadly, this week’s Annual Meetings look set to bring more of the same.
“The UN, in contrast, has a core mandate to address critical global issues, including sovereign debt, it is neither a creditor nor a debtor, and Member States can participate on an equal footing. So the UN, and particularly the upcoming International Financing for Development Conference, is the right place to advance on a comprehensive reform of the global debt architecture.”
The paper proposes to open a process for a UN Framework Convention on Sovereign Debt, that should address at least 10 reforms. The paper urges decision makers to take advantage of the upcoming Fourth United Nations Financing for Development Conference (FfD4), and there agree to open an intergovernmental process to set up a framework convention to develop a global consensus on the necessary rules, principles, and structures throughout the different interdependent stages of the debt cycle.
The 10 reforms cover:
- A multilateral sovereign debt resolution mechanism
- Binding responsible lending and borrowing principles
- Automatic mechanism for debt relief in the wake of catastrophic external shocks
- Climate resilient debt clauses
- A global debt registry to promote transparency
- A new approach to debt sustainability frameworks and analyses
- Domestic legislation on responsible financing and debt management
- Debt audits
- Domestic legislation in creditor countries to contribute to effective debt resolution
- Regulation of the financial system, including credit rating agencies
Fresnillo said: “The Financing for Development process is the legitimate forum in which debt architecture reform should be discussed, as everyone has a seat at the table. The reforms we have set out in this briefing are the bare minimum that must be advanced to set up a system to ensure that people in the global south never again face the devastating crisis they are living through today. In parallel, creditors should commit to urgently cancel unsustainable and illegitimate debts.”
ENDS
This week Iolanda Fresnillo will be at the Annual Meetings of the IMF and World Bank.
To request an interview or for further information contact: Julia Ravenscroft, Communications Manager, Eurodad, on [email protected]/ +44 7958 184 695.
Notes to editors
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Click here to read the briefing in English, Spanish and French.
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The briefing is published by the European Network on Debt and Development (Eurodad) and endorsed by the following Eurodad members:
- 11.11.11 (Belgium)
- CCFD - Terre Solidaire (France)
- CNCD-11.11.11 (Belgium)
- Debt Justice (UK)
- Debt Justice Norway (Norway)
- Erlassjahr.de (Germany)
- Financial Justice Ireland (Ireland)
- Friends of the Earth Hungary (Hungary)
- Global Policy Forum (Germany)
- Norwegian Church Aid (Norway)
- Observatori Del Deute en la Globalització (ODG) (Spain)
- Oxfam International (International)
- Recourse (International)
- Here you can find a link to a video and a briefing titled ‘The debt games: is there a way out of the maze?’, which helps to explain why we need a multilateral debt resolution mechanism for countries in debt distress.
- The 3.3 billion figure for people living in countries that spend more on interest payments than on healthcare or education comes from a report by UNCTAD - A World in Debt report 2024 - which you can find here.
- Here you can find a link to the recent briefing by Debt Justice UK ‘Analysing outcomes of debt restructurings’, which shows how much creditors are profiting even after debt restructurings and how insufficient these are for countries with unsustainable debts.