Debt sustainability assessment reform essential to address retrogression of international human rights

4 October 2023

International Human Rights Day protest Manila, 10 December 2020.

International Human Rights Day protest Manila, 10 December 2020. Credit: Ryomaandres

This year marks the 75th anniversary of the Universal Declaration of Human Rights (UDHR). Despite widespread commitments to the international human rights system by the shareholders of international financial institutions, the anniversary takes place in the context of a human rights retrogression, which results in part from the consequences of soaring debt. The international community’s capacity to respond to mounting concerns is significantly hampered by the IMF’s lack of a human rights policy and related unwillingness to heed calls to integrate states’ international human rights obligations into its Debt Sustainability Analyses (DSAs), which it conducts jointly with the World Bank (see Observer Autumn 2022).

The polycrisis has resulted in an additional 165 million people falling into poverty, according to a July UN Development Programme’s (UNDP) report titled, The Human Cost of Inaction: Poverty, Social Protection and Debt Servicing, 2020–2023. At the launch of the 2023 State of Food Security and Nutrition in the World 2023 report in July, UN Secretary-General Antonio Guterres stressed, “in a world of plenty, no one should go hungry… [But] Up to 780 million people do not have enough to eat. More than 3 billion can’t afford a healthy diet.” As documented in UNDP’s report, inaction on the debt crisis, combined with deteriorating global economic conditions has significant human costs (see Observer Spring 2023, Winter 2020). Human Rights Watch reported in April 2022 that its analysis of 16 countries, “found that targeted programs [supported by the IMF] excluded millions of people who were in need of social security to protect their rights, leaving them without adequate food.” Similarly, a 2022 Oxfam analysis of IMF programming found that, “13 out of the 15 IMF loan programs negotiated during the second year of the pandemic…could put vital public services at risk. The IMF is also encouraging six additional countries to adopt similar measures” (see Observer Autumn 2023). This analysis was complemented by other Oxfam research released in April 2022 that demonstrated that “43 out of 55 African Union member states face public expenditure cuts totalling $183 billion over the next five years.”

UN human rights experts call for revamp of debt sustainability analysis to go beyond financial sustainability

The central role played by DSAs in the current context is made clear by the UN Global Crisis Response Group’s report, A World of Debt, released in July, which stressed, “The burden of debt on development is intensified by a system that constrains developing countries access to development finance and pushes them to borrow from more expensive sources, increasing their vulnerabilities and making it even harder to resolve debt crises” before noting that, “In total, 48 countries are home to 3.3 billion people, whose lives are directly affected by underinvestment in education or health due to large interest payment burdens.”

Multilateral creditors – IMF and the World Bank – allow for the label of ‘sustainable’ to be applied undulyAttiya Warris, UN Independent Expert on Debt and Human Rights

The evidence cited above substantiates calls for the inclusion of international human rights obligations into DSAs. Attiya Warris, the current UN Independent Expert on Debt and Human Rights stressed in her August 2021 report, “Current practice examines debt sustainability through a narrow economic approach…Debt sustainability assessments performed by multilateral creditors – IMF and the World Bank – allow for the label of ‘sustainable’ to be applied unduly, in contexts where debt servicing may be depriving a State of resources needed to guarantee human rights.” Waris builds on her predecessor’s 2016 report, which argued, prior to the increased debt vulnerabilities resulting from the Covid-19 pandemic and recent capital outflow from the Global South, that, “the current review of frameworks for debt sustainability analysis should be based on a more comprehensive understanding of debt sustainability, incorporating human rights and the social and environmental dimensions of sustainability.”

The integration of human rights variables into DSAs would signal the willingness of the IMF and its most powerful shareholders to truly honour the 75th anniversary of the establishment of the international human rights system. It would mark a significant step in the Fund’s willingness to heed long-standing civil society calls for the institution to develop a human rights policy that underpins all of its programming and to ensure its policy and programmes are consistent with The Principles for Human Rights in Fiscal Policy, and benefit from the application of the UN Guiding principles on human rights impact assessments of economic reforms.