Committee for the Abolition of Illegitimate Debt

“Even though austerity can be a useful tool of administration against the squandering of resources, it is essential to keep in mind that austerity impacts different social groups in very different ways, especially the most vulnerable and marginalised,” says Bohoslavsky.

“Although States are the main guarantors of human rights, international financial institutions can also be held responsible if they are complicit in prescribing policies with probable negative impacts on human rights,” the expert said.

“If international financial institutions can be made responsible for the preventable damage caused by a dam built with their funding, why should they not be responsible for the preventable human rights harm to people caused by regressive economic policies?”

Bohoslavsky said it was worth noting that the austerity measures promoted by the IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org and other international financial institutions were not for everyone, as they did not restrict payment of public debt to national and international foreign creditors. On the contrary, the restrictive monetary policies increase interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. payments. “It is austerity for the poor, not for creditors”, he highlighted.

It isn’t surprising that the combination of economic deceleration and changes in fiscal policy negatively impact a wide range of human rights. “Unfortunately, austerity measures often lead to reduced food subsidies, and cuts in essential public services. They have a negative impact on salaries and on social investment like housing, infrastructure, health and education,” he says.

“From an economic viewpoint, there is no evidence that fiscal consolidation contributes to recovery. But there is much clearer evidence of the negative impact of structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

IMF : http://www.worldbank.org/ programmes over economic growth, jobs, debt sustainability and, ultimately, equality,” Bohoslavsky says.

The Independent Expert extensively argues in his report that there is a solid legal basis on which to say that, in principle, austerity policies during times of recession are incompatible with obligations to guarantee the enjoyment of human rights.

International human rights law prevents countries from being forced to fully repay their debts at the expense of increases in child mortality, unemployment or malnutrition.

Bohoslavsky says the international financial institutions could be considered responsible for complicity with economic reforms that violate human rights. Legal responsibility for such complicity can lead to human rights obligations for these institutions such as cessation, guarantees Guarantees Acts that provide a creditor with security in complement to the debtor’s commitment. A distinction is made between real guarantees (lien, pledge, mortgage, prior charge) and personal guarantees (surety, aval, letter of intent, independent guarantee). of non-repetition and reparations.

The Human Rights Council, in March 2019, voted on the Guiding Principles on Human rights impact: assessment of economic reform policies. Section V of these principles explicitly addresses the role and responsibilities of international financial institutions. “This instrument can serve as a guide for present and future processes of economic reform,” Bohoslavsky said.

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