A/HRC/37/54 I. Introduction 1. The latest global financial crisis (2007–2008) is widely considered the worst of its kind since the Great Depression. A decade later it continues to take a toll through fiscal austerity that dampens recovery and reduces the scope for economic and social transformation that is needed to generate more inclusive, rights-based societies with access to decent work, social services and social protection for all.1 2. The contagion of the financial crisis that was ignited in the United States of America was fuelled by what has been described as “hyperglobalization”, which brought both benefits and increased vulnerability to societies around the world. It also opened the way for financialization, a process that enabled financial institutions and markets to increase in size and influence. The United Nations Conference on Trade and Development (UNCTAD) concluded that the continuation of that process, along with deepening inequalities, increased the likelihood of a financial crisis recurring. 2 3. Financial crises can be caused by many different factors, including massive bailouts of private financial institutions, unfair trade agreements, external economic shocks, irresponsible lending and borrowing, weak resource mobilization and tax collection, tax evasion and avoidance, corruption and bad economic policies that are not aligned to inclusive social development and the realization of human rights. In addition, the absence of a system for resolving debt distress situations in a timely, fair, predictable and human rights-compliant manner has exacerbated problems. Irrespective of whether financial crises are caused by external or internal factors or a combination of both, there is need to develop frameworks for solving them which put respect for human rights at the centre. 4. Since the 1980s, there has been growing consensus that economic crises and many structural adjustment policy packages that have been implemented to prevent or overcome them can cause severe adverse human rights impacts. It is then not surprising that economic reform policies have been increasingly associated with initiatives to mitigate adverse impacts on the livelihoods of poor communities. Yet, for a number of reasons, these initiatives have often been far from being considered successful. 3 While it has been acknowledged that structural adjustment and fiscal consolidation policies can have massive adverse impacts on persons in situation of vulnerability, most of those policies have not been designed or implemented in a manner that would promote or safeguard human rights. 4 Often the focus has been limited to mitigating the worst social impacts, rather than implementing reforms that would prevent or dampen future crises. Reforms would also protect and promote the realization of economic and social rights through investment in people, thereby making them more sustainable over the medium term. 5. Countercyclical responses that invest in social development are both feasible and associated with a more equitable and sustainable economic recovery. However many States and international financial institutions do not seem to have learned those lessons; austerity has been the predominant response to the recent financial crisis, and fiscal consolidation policies have largely remained human rights blind, with their principal focus on ensuring balanced public budgets at all costs. 5 International and regional human rights mechanisms have pointed out that budget cuts in various countries have affected the rights to health, education, food, housing, work, social security, water, as well as political and civil rights, such as access to justice, the right to participation, the freedoms of expression, assembly 1 2 3 4 5 See Isabel Ortiz and others, “The decade of adjustment: a review of austerity trends 2010–2020 in 187 countries”, Extension of Social Security Working Paper No. 53 (Geneva, International Labour Office (ILO), 2015); also United Nations Conference on Trade and Development (UNCTAD), Beyond Austerity: Towards A Global New Deal, Trade and Development Report 2017. See UNCTAD, Beyond Austerity. For more details, see A/71/305 and A/HRC/23/37. See, for example, E/2013/82 and A/HRC/17/34. See Juan Pablo Bohoslavsky and Kunibert Raffer (eds.), Sovereign Debt Crises: What Have We Learned? (Cambridge, United Kingdom, Cambridge University Press, 2017). 3