Life, Debt and Human Rights: Contextualising the International Regime for Sovereign Debt Relief

Abstract

Since 1996, the G8 and other northern creditor states have accepted the principle of debt cancellation in the sovereign debt regime, responding to the political impetus to address third world indebtedness through a series of official debt relief programmes. However, the long-term sustainability of this approach is uncertain. The international regime for sovereign debt relief remains ad-hoc in nature and relies heavily on the political will of key creditor states. Further, despite a notional operational link between debt relief and poverty reduction, the current system prioritizes debt servicing over and above a state’s duty to provide for the social and economic welfare of its citizens.

This paper considers the notion of debt relief for developing countries within a wider context of global redistributive justice, global public goods and human rights. It argues that the limitations of the contemporary debt regime stem from its underlying conceptual approach to debt relief, viewing sovereign indebtedness as a problem of bad governance and poor fiscal management and not one that is symptomatic of the wider structural deficiencies of the global economic system. The paper argues that debt relief and mechanisms for achieving them must be located within a wider systemic reform of the international financial architecture and that this, in turn, must be located within a human rights-based framework. The systemic issues of the international financial architecture and the asymmetrical regulatory norms of international finance contribute to the problem of sovereign indebtedness.

Keywords: debt relief, debt restructuring, development aid, global public goods, governance, Heavily Indebted Poor Countries (HIPC), initiative, human rights, international financial stability, international financial architecture, IMF, Paris Club, poverty reduction, sovereign debt, structural adjustment