UNSUSTAINABLE and ILLEGITIMATE DEBT
APMDD scores putting blame on borrowers, slams lenders' lack of debt transparency at 13th UNCTAD Conference
"We believe that debt transparency should apply to all debt instruments and countries, regardless of income levels... For certain, borrowing governments should be held responsible for contracting and accumulating burdensome and illegitimate debts. But transparency is just as wanting among lenders. In many instances, the weight of culpability and accountability rests primarily and heavily on lenders."
The message expressed by APMDD at the 13th UNCTAD Debt Management Conference held in Geneva last Dec. 5-7 drove home a key critique of lenders demanding debt transparency on the part of borrowers while conveniently excusing themselves from their own guidelines.
APMDD was represented by Mae Buenaventura of the Debt Justice Program in the panel that included Riccardo Boffo, Economist and Financial Analyst (OECD); Yuefen Li, Senior Adviser, South-South Co-operation and Development Finance (South Centre); and Sonja Gibbs, Managing Director and Head of Sustainable Finance, Institute of International Finance (IIF).
The Conference is held regularly as a biennial forum for sharing experiences and exchanging views between governments, international organizations, academia and civil society on debt-related developments in developing countries and on debt management issues in the broader macroeconomic context.
The most recent effort proceeds from the OECD Debt Transparency Initiative which principles drafted without public consultations by the IIF, a group for the financial industry and composed of the world's largest commercial and investment banks. International financial institutions such as the International Monetary Fund and the World Bank, the G20 and the OECD promote these guidelines, ignoring other sets of principles already in place. These include the UNCTAD Principles on Promoting Responsible Sovereign Lending and Borrowing which benefitted from broad participation and consultation with civil society, among them APMDD, media, academe and other stakeholders.
Read the full intervention here.
"In 2018, our report History RePPPeated – How Public-Private Partnerships are failing challenged the increasing promotion of Public-Private Partnerships (PPPs) as a silver bullet to finance development projects. It showed that PPPs often come at a high cost for the public purse and citizens, an excessive level of risk for the public sector and have a negative impact on democratic governanceHowever, calls for an increasing role for the private sector in the financing of infrastructure and public services, and for PPPs in particular, continue to grow.
Currently, PPPs are being promoted through a vast array of tools and by a wide range of institutions, including bilateral donor agencies, United Nations agencies and multilateral development banks (MDBs). The World Bank Group continues to be at the forefront of the promotion of PPPs, and of the use of private finance in development more generally.
The rationale is that PPPs may help overcome challenges in the financing, implementation and delivery of infrastructure and public services, based on the assumption that the private sector brings additional finance, and that private companies are inherently more efficient than the public sector in delivering high-quality public services. This overlooks evidence that points to the contrary and the fact that decades of structural adjustment programmes and austerity policies have left public services underfunded.
This report is the second in the History RePPPeated series and is once again the result of a joint civil society effort from organisations around the world. Through emblematic cases across four continents, the report provides an in-depth analysis of various kinds of PPP projects in both the global south and north. It also analyses emerging trends in the intervening four years since the first report was published, particularly in light of the Covid-19 pandemic and the multiple crises facing the world.
Since then, the context for the continued promotion of PPPs has become even more complex and uncertain. In early 2020, the arrival of the Covid-19 pandemic highlighted how market-based models cannot be relied upon to deliver on human rights such as health, education and water provision, and the fight against inequalities. In 2022, the upsurge in the cost of living, the energy crisis and the climate crisis have further highlighted the failures of the current economic model and the urgent need to build a different one."
Read and download the full report here.
Read more here.
The Asian Peoples’ Movement on Debt and Development (APMDD) today joined hundreds of organizations worldwide participating in a global week of action to demand debt cancellation amid multiple crises as international lenders led by the World Bank and the International Monetary Fund (IMF) meet in Washington DC for their annual meetings.
Public actions in the Philippines, Nepal, Pakistan, Indonesia and India denounced the failure of lenders to heed the growing demand to cancel the debt in the face of skyrocketing prices of food and fuel and intensifying climate emergency.
Hundreds of Filipino activists marched to the Philippine Senate to call for immediate debt cancellation and the repeal of the Automatic Appropriations Law. Several participants each wore a mock ball and chain around their neck, symbolizing the increasing gravity of the country’s debt burdens.
Freedom from Debt Coalition (FDC) President Rene Ofreneo slammed a decree by the late Ferdinand Marcos Sr. that remains in place, which automatically prioritizes debt payments. “This is a legacy of the Marcos dictatorship that is grossly unjust and must immediately be repealed. The Filipino people do not even know what they are paying for, when these debts were contracted in their name. It’s time for a debt audit to weed out loans that did not benefit us at all. Surely, this is common sense that should be plain to all, not least the current President.”
He cited the record-high national government debt of PhP13.02 trillion as of August. “That’s about PhP127,000 of debt for each Filipino, which will be paid out of public funds at a time when public support for public basic services is urgently needed by our people,” Ofreneo lamented the additional $2 billion added to the Philippines’ debt bill when the newly-installed administration of Ferdinand ‘Bongbong’ Marcos Jr. sold its first global bond.
APMDD Coordinator Lidy Nacpil stated that the Philippines is one of many countries around the world caught in multiple crises of public health, economic recession and climate change. “Mounting debts mean mounting debt service, resulting in cuts to budgets for healthcare, and education, decent housing and other essentials. Burdensome debts are also stopping governments from decisively tackling the climate crisis,” said Lidy Nacpil, APMDD coordinator.
Nacpil cited Sri Lanka, Pakistan, Zambia, Lebanon and Ghana as the most recent examples. “Pakistan, in particular, which has recently experienced devastating floods because of the climate crisis, has seen 33 million people displaced. Yet the government is still expected to pay US$18 billion in debt payments to foreign lenders. This situation cannot continue.”
These are also countries that have been paying debt service and complying with structural adjustments and austerity conditionalities by lenders, despite the budget cuts these entailed in social spending. In Asia, unsustainable debt levels pile up with dire consequences for developmental needs such as in Sri Lanka which defaulted in May, and Pakistan where public funds continue to be siphoned into debt service.
Farooq Tariq, General Secretary of the Pakistan Kissan Rabita Committee said, “As humanitarian organizations scrambled for emergency funds, a familiar face reared its head once more. The IMF, recently approved a bailout request with a plan to release $1.1 billion to the country. At first glance, this may seem like a vital step in Pakistan’s recovery, but to pile further debt on a country already in the grip of a financial crisis will only end in greater disaster and injustice.”
Echoing the global call, protesters stressed that “we will not be held hostage by the lenders and global rule-makers who are leading us down a path towards greater inequality, impoverishment, deprivation and ecocide.” As public institutions, the IMF and the World Bank remain influential peddlers of loans among Global South countries and still fail to account for their responsibility in creating the vulnerabilities to pandemics, economic recessions and climate change.