International financial institutions and wealthy States imposing structural reform programmes on poor countries or executing debt repayments should ensure that when doing so they do not undermine basic cultural, social and economic rights, an independent United Nations human rights expert said today.
Bernards Mudho, the Human Rights Council’s Independent Expert on the effects of economic reform policies and foreign debt on the full enjoyment of all human rights, detailed draft guidelines for financial institutions and industrialized States to follow when pursuing economic restructuring programmes in developing countries.
He told the General Assembly’s third committee (social, humanitarian and cultural issues) that the draft guidelines include a provision calling on institutions demanding repayment of foreign debts to ensure that a debtor country is not prevented from fulfilling its human rights obligations to its citizens as a result.
Moreover, whenever major economic reform programmes are being considered, including macroeconomic stabilization, trade liberalization and social sector reform, social, cultural and economic impact assessments should be conducted first.
Mr. Mudho added that creditors and borrowers must share responsibility for new loans and debt sustainability.
“The creditors and the borrowers should assess [the] economic and social impact of debt service obligations before entering into a new loan agreement,” he said. “The performance of each loan should be monitored by both the creditors and the borrowers, and the agreements should allow review of loan conditions.
“Both the negotiations and implementation of loan agreements should be transparent and open to public scrutiny, including [the] participation of civil society and state legislature.”
The Independent Expert also said the global lending economy should also agree on common lending principles, especially in cases of potentially unsustainable debt situations.
“These include debt relief, debt swapping and shifting to highly concessional loans and grants, particularly in absorbing external shocks.”
In addition, he said, human rights obligations should play a key role in trade negotiation processes.
The guidelines are now being circulated among Member States and others and Mr. Mudho said he hoped the draft would serve as a basis for constructive discussions on issues of economic management.
He plans to submit a final draft of the guidelines to the Council in December so that it can begin deliberations on whether to approve them.