DESIGNING HUMAN RIGHTS-ALIGNED REFORMS FOR DEBT RESTRUCTURINGS

This research paper argues for the establishment of a common international framework for sovereign debt restructuring based on human rights principles to address the global debt crisis, particularly in the Global South. The authors contend that current contractual, market-based approaches are inequitable and opaque, often prioritizing creditor interests over essential socio-economic rights. They propose a statutory, legally binding mechanism under the auspices of the United Nations to ensure transparency, accountability, and the protection of minimum standards of living during debt workouts.

• The global debt crisis is severely impacting the Global South, where debt servicing costs are displacing essential spending on health, education, and climate action. In Africa, debt service absorbs 54% of revenue and 40% of spending, exceeding expenditure on climate action by 50%.
• Current sovereign debt restructuring is described as a "non-system" characterized by inefficiencies and inequities. The G20's Common Framework and Debt Suspension Service Initiative are deemed insufficient because they do not compel private creditors—who hold approximately 39% of debt—to participate.
• The authors propose several human rights-aligned policy recommendations for debt restructuring: explicitly recognizing human rights standards, integrating human rights into debt sustainability assessments (DSAs), conducting Human Rights Impact Assessments, ensuring fiscal space for minimum core socio-economic rights, observing the principle of good faith, and recognizing the need for debt cancellation in certain cases.
• The paper advocates for a statutory approach to debt restructuring via an independent, multilateral, and legally binding process under the United Nations. The UN is identified as the ideal candidate due to its universal membership, lack of financial interest as a creditor or debtor, and its mandate to protect human rights.
• A statutory framework is presented as a solution to the "holdout problem," where creditors refuse to agree to restructuring plans to seek full repayment. While Collective Action Clauses (CACs) attempt to address this, they are not universal; for example, 61% of outstanding bonds lacked these provisions as of October 2018.
• The authors argue that debt is often rooted in colonial legacies and acts as a structure of historic racial oppression. They suggest that achieving substantive equality may require reparations, which could include debt cancellation and the removal of aid conditionalities for Global South nations.
• Past attempts at statutory mechanisms, such as the IMF's 2002 Sovereign Debt Restructuring Mechanism (SDRM) and various UN General Assembly resolutions (68/304 and 69/319), failed primarily due to opposition from major creditor nations like the United States and United Kingdom, who feared market uncertainty and loss of contractual enforceability.

APA

Ampofo-Anti, O., Inge, C., Forgette, M., Mamberti, M. E., & Ramburuth, K. (2025). DESIGNING HUMAN RIGHTS-ALIGNED REFORMS FOR DEBT RESTRUCTURINGS. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2025/04/IEJ-G20-3-Designing-human-rights-2025-1.pdf

Chicago

Ampofo-Anti, Ohene, Charlotte Inge, Matthew Forgette, María Emilia Mamberti, and Kamal Ramburuth. DESIGNING HUMAN RIGHTS-ALIGNED REFORMS FOR DEBT RESTRUCTURINGS. Institute for Economic Justice, 2025. https://iej.org.za/wp-content/uploads/2025/04/IEJ-G20-3-Designing-human-rights-2025-1.pdf.

Wikipedia

{{cite report |last1=Ampofo-Anti |first1=Ohene |last2=Inge |first2=Charlotte |last3=Forgette |first3=Matthew |last4=Mamberti |first4=María Emilia |last5=Ramburuth |first5=Kamal |title=DESIGNING HUMAN RIGHTS-ALIGNED REFORMS FOR DEBT RESTRUCTURINGS |publisher=Institute for Economic Justice |date=April 2025 |url=https://iej.org.za/wp-content/uploads/2025/04/IEJ-G20-3-Designing-human-rights-2025-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ampofoanti2025designing, author = {Ampofo-Anti, Ohene and Inge, Charlotte and Forgette, Matthew and Mamberti, María Emilia and Ramburuth, Kamal}, title = {{DESIGNING HUMAN RIGHTS-ALIGNED REFORMS FOR DEBT RESTRUCTURINGS}}, institution = {Institute for Economic Justice}, year = {2025}, month = apr, url = {https://iej.org.za/wp-content/uploads/2025/04/IEJ-G20-3-Designing-human-rights-2025-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }