Rethinking Bretton Woods | Fri, Sep 4, 2015
As the UN gets ready to take action on what would provide, for the first time, a multilateral set of principles to apply in sovereign debt restructurings, Center of Concern joins fellow organizations working on debt in a letter to member countries requesting their support.
On September 10, 2015, the UN will take action on a set of principles that for the first time would set a multilaterally agreed framework for sovereign debt restructurings --the “Basic principles on sovereign debt restructuring”— which were developed in a process that started last year. Center of Concern joins more than 35 debt justice advocacy organizations in calling governments for supporting the historic resolution.
“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,” the letter said.
The letter comes on the throes of debt crises in Greece, Ukraine and Puerto Rico (in the United States), showing debt crises are no longer just an issue of the developing world.
It also referred to the costs of bailouts with public funding due to the lack of a suitable framework for sovereign debt restructuring. “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.”