A/HRC/33/54 61. Human rights monitoring bodies have analysed how an excessive burden of high external debt repayments can significantly reduce the resources available for social investment. In fact, it has been demonstrated that in many countries debt repayment is often carried out at the expense of basic human rights, including the rights to food, health, education, adequate housing and work. In the case of Ecuador, for example, the Committee on Economic, Social and Cultural Rights noted that the high percentage of the annual national budget (around about 40 per cent) allocated for foreign debt servicing seriously limited the resources available for the achievement of effective enjoyment of economic, social and cultural rights (see E/C.12/1/Add.100, para. 9). 62. The case of Malawi may be extreme, but it shows how debt repayment affected the country’s capacity to create the necessary conditions for the realization of economic and social rights. In 2002, the Government decided to sell the maize from its national food reserve agency with the aim of raising funds to repay loans. Following a poor harvest that year, 7 million people, of a population of 11 million, were left facing a serious food shortage (see A/HRC/11/10, para. 30). Activities of vulture funds jeopardize international poverty reduction initiatives 63. The ability of vulture funds to jeopardize the objectives of the International Monetary Fund and the World Bank HIPC Initiative is striking, particularly bearing in mind that it aims at ensuring the debt sustainability of poor countries.75 In a number of cases, it has been clearly demonstrated that resources freed up for development and poverty reduction programmes were used to service debt owed to vulture funds. This situation has led human rights monitoring bodies to urge the concerned State to reallocate international development aid and other resources to priority sectors and to ensure that international development aid is utilized for the progressive realization of the rights to an adequate standard of living see (see E/C.12/COD/CO/4, para. 29). 64. A good example is the case of the Democratic Republic of the Congo. A District Court in the United States ruled in 2014 that it had to pay nearly $70 million to a vulture fund for an $18 million debt acquired in 2008, dating back to the regime of former dictator Mobutu Sese Seko in the 1980s.76 On the basis of the improved fiscal situation resulting from international debt reduction programmes, the country was ordered to pay the claims of the hedge funds. This example shows how domestic rulings can clearly undermine the intent of the HIPC Initiative, which is often not taken into account by national courts.77 65. This is not an isolated case, however. In 2013, the World Bank and IMF reported that commercial litigation was ongoing against eight HIPC countries. The report highlighted that such legal struggles not only had adverse financial consequences for the poorest countries, but also took up considerable time and resources of debtor government authorities.78 66. Thus, under present circumstances, funds obtained by the poorest countries from debt relief may easily be channelled to repay an outstanding loan pursuant to court rulings. As a result of aggressive, disruptive litigation, a debtor State may be forced to divert money 75 76 77 78 The scheme was first launched in 1996 and was supplemented in 2005 by the Multilateral Debt Relief Initiative. More information is available from www.imf.org/external/np/exr/facts/hipc.htm. Themis Capital, LLC and Des Moines Investments Ltd., Plaintiffs v. Democratic Republic of Congo and Central Bank of the Democratic Republic of the Congo, Defendants, 14 July 2014. Taking Stock of the Global Partnership for Development: Millennium Development Goals Gap Task Force Report 2015 (United Nations publication, Sales No. E.15.I.5), p. 46. The State of the Global Partnership for Development: Millennium Development Goals Gap Task Force Report 2014 (United Nations publication, Sales No. E.14.I.7), p. 41. 17