August 2016: The UN Secretariat released two reports reviewing recent trends in foreign debt sustainability, their impact on human rights, and their interaction with the implementation of the 2030 Agenda for Sustainable Development. The reports were issued to the 71st session of the UN General Assembly (UNGA), which opened on 13 September 2016.

The first document, the report of the UN Secretary-General on ‘External debt sustainability and development’ (A/71/276), analyzes the evolution of external debt sustainability in developing and transition economies since 2000, and explores structural changes to developing country debt composition. The Report includes sections on: the Evolution of core debt indicators between 2000-2015; Changes in external debt composition between 2000-2015; Least Developed Countries (LDCs); Debt Relief Initiatives (the Heavily Indebted Poor Countries Initiative, the Multilateral Debt Relief Initiative, and the Paris Club); ODA; Challenges to debt sustainability in developing countries; and Conclusions and policy recommendations.

The report: stresses the urgent need to improve the availability and quality of data in specific areas, especially in the context of the Sustainable Development Goals (SDGs); calls attention to growing incidences of microdebt crises, while highlighting some of the implications of new challenges to developing country external debt sustainability for sovereign debt restructuring; and emphasizes the need for continued additional official development assistance (ODA) in the context of the winding-down of the debt relief initiatives.

Recommendations include: the reassessment of the role of microcredit as a poverty reduction policy, as new digital technologies and payment systems might swamp the un-banked poor in developing countries with more microcredit than available at present; improving the availability and quality of data and country coverage on domestic public debt, domestic and external private firm and household debt, and on legal and regulatory features (such as ownership, currency denomination and jurisdiction); or developing a clear definition of the additionality of ODA commitments for general developmental purposes vis-à-vis more specific objectives, such as addressing refugee crises and climate change.

The second publication, the report of the UN Independent Expert on “the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights” (A/71/305), recalls that the Independent Expert submitted two thematic reports to the UN 31st Human Rights Council, in March 2016, on the topics of: the interrelationship between inequality and financial crises and their implications for the enjoyment of human rights; and illicit financial flows and human rights and the 2030 Agenda. The report also provides an overview of debt-related policy developments at the UN, including the outcomes of the third International Conference on Financing for Development (FfD) and the 14th UN Conference on Trade and Development (UNCTAD 14), as well as the Basic Principles on Sovereign Debt Restructuring Processes.

The Expert, Juan Pablo Bohoslavsky, underlines the emergence of a new global wave of austerity and debt vulnerabilities in many developing countries, which challenges progress on human rights, and requires more policy efforts to prevent and solve such crises. He also argues 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 Independent Expert’s recommendations include: establishing a reporting mechanism on debt restructuring; ensuring that monitoring mechanisms track progress on the SDGs, including government spending on the Goals and sectors relevant for the progressive realization of rights; and incorporating human rights obligations into frameworks for carrying out debt sustainability analysis.

The Independent Expert concludes that a more robust and human rights-based framework for sovereign debt is needed in order to achieve the SDGs. [External debt sustainability and development: Report of the Secretary-General] [Report of the Independent Expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights]