Rethinking Bretton Woods | Thu, Jan 26, 2012
RBW Project Director, Aldo Caliari, contributes to a new study by Jubilee USA, "The Responsible Lending and Borrowing Imperative: Addressing the Root Causes of Poverty."
The Responsible Lending and Borrowing Imperative: Addressing the Root Causes of Poverty
For over two decades, the international community has implemented a series of measures to address unsustainable debt burdens in low-income countries (LICs). While milestone achievements in debt relief have been made, the ongoing impact of unsustainable debt burdens on LICs’ development still demands redress. Debt relief and cancellation are necessary but not sufficient. There are serious implications that a lack of transparency, accountability, and respect for democratic processes and information-sharing has in loan contractions and international financing. Holistic reflections on the interplay of political, economic and institutional factors (domestic and external) that contributed to the creation of the debt crisis must be reanalyzed in order to develop long-lasting solutions to the root causes of structural and chronic poverty.
In the post-debt crisis, a number of debt audits have been undertaken by both governmental and civil society organizations around the world. Conducted as a means of holding governments’ accountable to their citizens while increasing the transparency and accountability of governments’ financial transactions, these debt inquests should help to assess current debt, decrease the amount of future debt accumulated, and identify means of ensuring that future loans are beneficial, repayable, contracted transparently and are supported by the recipient nation’s citizens.
This study synthesizes concrete proposals of how the U.S. government can implement responsible lending and borrowing principles that would promote democracy and pro-poor development. Responsible lending and borrowing would contribute to the achievement of the Millennium Development Goals (MDGs) for the world’s poorest. As a means of demonstrating the need for more responsible lending and borrowing practices, this study integrates examples from around the world that illustrate the problems of the current system and the manner in which unsustainable debt could have been avoided had such principles been taken into account by creditors before approving or granting loans.