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UN Vote Supports Calls For Independent Debt Crisis Response System Outside …

October 17, 2015 - Author: Bradley - Comments are closed

Summary

  • CSO report warns of brand-new debt crises dangers
  • Report suggests systemic modifications to loaning and crisis response
  • UN resolution promoting principles for sovereign financial obligation restructuring passed

Increasing debt combined with a volatile international economy is putting a growing number of nations at risk of financial obligation crises, argues a July report by UK NGO Jubilee Financial obligation Project. The report, The brand-new financial obligation trap: How the response to the last worldwide monetary crisis has laid the ground for the next, found that the level of public and private sector debt worldwide increased from $11.3 trillion in 2012 to $13.8 trillion in 2014. It predicted that overall debt will reach $14.7 trillion by 2015. It attributed the rise in insolvency to low interest rates stimulating personal financing, especially to low income nations, and the enhanced use of concessional loans through multilateral lenders, such as the World Bank, frequently categorised as help.

The report identified nine countries as heavily dependentbased on international help (Bhutan, Ethiopia, Ghana, Lao PDR, Mongolia, Mozambique, Senegal, Tanzania and Uganda), with a substantial component given as loans provided at concessionary rates.

It criticised current responses to financial obligation crises wherein “the IMF and other organizations (such as the EU or World Bank) provide more money to countries in crisis so that they can service their old financial obligations.” It made 7 recommendations for lending, consisting of “monitoring and controling financing as it moves in between countries to avoid speculation, possession removing, illegal capital air travel and tax avoidance, and to motivate truly beneficial long-term financial investment.”

For any federal government financial obligation arbitration system to prosper, it needs to be independent, housed in an institution which is neither a lender nor a borrower – for instance, the UN rather than the IMFJubilee Debt Campaign

The report advised “a reasonable and transparent international financial obligation exercise procedure” to reduce the frequency and risk of crises, adding that debt arbitration systems needhave to be independent and based in an organization which is neither a lender nor a customer – for example, the UN instead of the IMF.”

In September the UN General Assembly voted extremely in favour of allowing new concepts to direct sovereign financial obligation restructurings. The nine concepts embraced by the GA consist of sovereignty, openness and sustainability.

6 voted against: Canada, Germany, Israel, Japan, UK and the US. Bhumika Muchhala of NGO Third World Network commented in September: “The votes show the geo-political pattern in the UN where developing nations enact favour of steps to enhance the stability and fairness of the international financial system, while the most powerful developed countries commonly block such steps, suggesting that such discussions should just take place within global monetary institutions and not the UN.”

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