Debt relief as if justice mattered: a framework for a comprehensive approach to debt relief that works

This report discusses a new comprehensive approach to debt relief.

The author stresses that with concern growing about the stability of the global financial system, and the end of an unprecedented period of low interest rates now in sight, this is needed more than ever. The report shows that some countries are spending more than twice their education and health budgets on debt service. For example, Lebanon spends 52 per cent of its government budget on debt service compared to 23 per cent on health and education combined. In addition to this the level of debt relief required to achieve debt sustainability for all lower and middle income countries is estimated at $501 billion.

Key points include:

• debt relief isn’t working: current approaches to debt relief (HIPC and MDRI for poor countries. and Paris and London Club renegotiations for middle income countries) are not solving the problems of Third World indebtedness
  
• the present approach is marred by the involvement of creditors as judge, prosecution and jury in direct conflict with natural justice and by the failure to take into account either the human rights of the people of debtor nations
• there needs to be a quasi-judicial process whereby regimes can be declared questionable and mechanisms put in place for an orderly work-out unsustainable debt
• the author recommends the creation of a panel of adjudicators chosen on a regional basis by all legislatures, who would sit in panels of three to assess the legitimacy of all regimes at the point of regime change.