Restructuring of sovereign debt: UN Expert stresses GA principles are binding

by Juan Pablo Bohoslavsky

The Independent Expert on the effects of foreign debt and human rights, Juan Pablo Bohoslavsky, welcomed today the new resolution adopted by the United Nations General Assembly on the “Basic Principles on Sovereign Debt Restructuring Processes.”

“The new GA resolution is a positive step towards clarifying which existing rules and principles of international law apply to sovereign debt issues,” said the Expert. “It will for example provide legal guidance on how to prevent and deal with vulture credits,” he added.

“Sovereign debts should be geared towards implementing economic and social policies, with a view to achieving growth and development in the concerned countries. Unfortunately, as it is too often the case, sovereign debts can also throw millions of people into poverty, in particular when resulting in a debt crisis,” said the expert.

 Over the past few years, the United Nations has increasingly stressed issues related to debt sustainability and development, and dedicated time and effort to design meaning solutions to address them.

Moreover, the issues of foreign debt, debt relief, debt restructuring and vulture funds have for many years been subject of Human Rights Council resolutions. Back in 2012 and 2013, the Human Rights Council deplored “the absence of mechanisms to find appropriate solutions to the unsustainable foreign debt burden of low - and middle - income heavily indebted countries, and that, to date, little headway has been made in redressing the unfairness of the current system of debt resolution.”

“The set of principles on debt restructuring passed today by the UN General Assembly reflects customary law and general principles of international law to a large extent and, as such, are legally binding,” said Mr. Bohoslavsky.

“As outlined by UNCTAD over the past few years, this GA resolution is not creating new rights or obligations, it simply identifies, in a clear and systematic manner, the existing and well-rooted-principles which apply to the field of sovereign debt,” added the human rights expert.

“The principles passed by the GA are meant to be operational and to protect human rights during crisis times, and should therefore be interpreted in line with this objective,” he added.

The Independent Expert will present his annual report to the General Assembly on 26 October and will reflect on the need to ensure that human rights law as well as the principles of legitimacy and sustainability, two of the principles incorporated in the GA resolution, are respected when debts are being repaid.
See more at: http://www.ohchr.org/EN/NewsEvents/.