COC

Focus Two: Root Causes of Debt

CoC co-authors submission on debt sustainability

Rethinking Bretton Woods | Sat, Jun 25, 2016

CoC co-authors submission on debt sustainability

The IMF and World Bank started a review of their Debt Sustainability Framework (DSF) for low income countries, a framework used for determining examining whether countries are, and will in the future, be able to maintain payments on their sovereign debt. On this basis, the reviews are also used, among other things, to decide how much countries are allowed to borrow.

 

Center of Concern together with more than 35 organizations and networks wrote a submission with recommendations for the ongoing review. The role of investment to pay for the Sustainable Development Goals, the independence required in the assessments and the analysis of liabilities linked to Public Private Partnerships are among the issues addressed by the submission.

Debt relief campaigners decry Argentina’s payment to holdout creditors

Rethinking Bretton Woods | Mon, Mar 14, 2016

Debt relief campaigners decry Argentina’s payment to holdout creditors

Argentina’s agreement in principle to pay out claims to creditors that had stayed out of the sovereign debt restructurings of 2005 and 2010 triggered widespread expressions of concern from debt justice advocates.

“The settlement validates a predatory and exploitative business model,” said Eric LeCompte, Director of Jubilee USA network. According to a spokesperson from the European Network on Debt and Development,  “Now Argentina needs to borrow even more money to pay the vultures – a huge sum for a country struggling to finance many essential services. This disgraceful situation is allowed because no insolvency regime exists that can enforce all creditors’ participation." In a statement, the Latin American Network on Debt, Development and Rights said “From leading a worldwide struggle against illicit financial flows and the pirate economy of vulture funds . . . [Argentina] is now sitting at the table with the vultures, renegotiating a payment of a debt that had already been acknowledged as illegitimate.” The deal “will increase moral hazard and encourage disruptive hold-out litigation worldwide,” said the UN Independent Expert on Foreign Debt and Human Rights, warning of the negative human rights consequences of such actions.

RBW Project Director Aldo Caliari said “It is a sad day for those seeking a fairer approach to handling  sovereign debt crises. At the same time, the senselessness of how Argentina’s saga played out has helped galvanize opinion that a sovereign debt workout mechanism is urgently needed.”

                             Argentina after the insolvency: Not yet a plaything of "vulture funds" (October 2015)

Rethinking Bretton Woods | Thu, Oct 15, 2015

Argentina after the insolvency: Not yet a plaything of "vulture funds" (October 2015)

In 2001 amidst a profound economic and social crisis carrying tremendous human costs, and after successive adjustment programs prescribed by the International Monetary Fund had proved fruitless, Argentina had little choice but to stop payments and seek a renegotiation of the terms of its sovereign debt. Eventually, it reached deals restructuring the debt in 2005 and 2010 with more than 92 per cent of creditors who took a haircut (debt reduction) of around 70 cents on the dollar. NML Capital was among those creditors who refused to accept the terms of the agreement reached by Argentina with the majority of creditors and sued the country in US courts for payment of a 100 per cent of their credits.

In an article appeared on the German Forum on Environment and Development's magazine, RBW Project Director Aldo Caliari explains how NML’s practice fits into a business model adopted by “vulture funds” and what is at stake in Argentinean attempts to fend off their judicial and political tactics. (Article is only available in German)

Rethinking Bretton Woods | Fri, Jul 31, 2015

Greek crisis brings to the fore human rights implications of macroeconomic policies

On a recent press release, the UN Independent Expert on Foreign Debt and Human Rights, Juan Pablo Bohoslavsky, urged the European institutions, the International Monetary Fund and the Greek Government to fully assess the impact on human rights of possible new austerity measures to ensure that they do not come as a cost to human rights. “[F]urther adjustment policies should respect the human rights obligations that are binding not only for the Government of Greece, but as well for the creditor countries and lending institutions,” he said, adding that some of the harsh austerity measures could be incompatible with European and international human rights law. (Photo credit: CC/Flickr/ Jonathan Stevenson/Jubilee Debt Campaign)

Read full press release

Join us in calling on the World Bank and the IMF to cancel Nepal's debt

Rethinking Bretton Woods | Thu, May 21, 2015

Join us in calling on the World Bank and the IMF to cancel Nepal's debt

 

Over the course of three weeks, two major earthquakes struck Nepal and took over 8,000 lives. Nepal is one of the poorest countries in the world and pays nearly $600,000 a day in debt. Jubilee USA calls on the IMF and the World Bank to immediately cancel Nepal's debt to support recovery and rebuilding efforts.

This February, Jubilee USA won a new debt relief trust fund at the IMF designed exactly for this purpose - aiding poor countries in times of crisis. This fund could cancel the $23 million Nepal owes the IMF over the next two years, but only if we act. Meanwhile, Nepal owes the World Bank $1.5 billion in debt. We call on the World Bank to cancel that debt and create its own emergency fund for poor countries in crisis.

Click here to sign the petition.

Rethinking Bretton Woods | Tue, Apr 7, 2015

RBW speaks on human rights impacts of vulture funds

 

Recent vulture fund litigation against Argentina has shed new light on the operations of commercial firms that as a systematic strategy prey on sovereign debtors to exact full debt payments other creditors agreed to forgive. Last February an advisory body to the Human Rights Council met to discuss human rights impacts of such companies’ actions and possible remedies.

“The debt relief we had campaigned for was not for paying 100 per cent of the claims of creditors not willing to provide their share of debt relief, but to allow necessary social investments to happen in [the debtor] countries,“ said RBW Project Director Aldo Caliari speaking of the successive debt cancellation rounds achieved by the worldwide Jubilee movement. Center of Concern co-founded Jubilee USA Network, of whose Board Mr. Caliari is currently co-chair.

Read a blog at rightingfinance.org.

Read a recent article on this subject.

Where the Argentine Debt Case Stands Now, and Why it Still Matters (April 2015)

Rethinking Bretton Woods | Mon, Apr 6, 2015

Where the Argentine Debt Case Stands Now, and Why it Still Matters (April 2015)

 

In an article written for the North American Congress on Latin America, “Where the Argentine Debt Case Stands Now, and Why it Still Matters,” RBW Project Director Aldo Caliari explains why allowing a U.S. court ruling to determine the process for international debt repayments sets a dangerous precedent, and exposes gray areas in international legal jurisdiction.

 

US ruling on Argentina debt: Weighing the human rights consequences

Rethinking Bretton Woods | Sun, Aug 10, 2014

US ruling on Argentina debt: Weighing the human rights consequences

 

Should the predatory practices of a few hedge funds be allowed to jeopardize a debt relief deal reached by a country with 92 per cent of its creditors? Is that consistent with human rights principles applicable to the behavior of both debtors and creditors? Center of Concern joined the Argentina-based Center for Legal and Social Studies and the Center for Economic and Social Rights in urging governments to weigh the global human rights consequences of a continued gap in the international financial architecture. The document attracted support from more than 100 organizations worldwide and was reported in media, such as the Wall Street Journal.

Read a blog on this topic appeared on RightingFinance.

 

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