A/HRC/40/57 11.11 States should consider how proposed economic reforms may impact directly on or otherwise reduce a State’s ability to address national ecological conditions and significant global ecological thresholds which affect the realization of human rights. Principle 12 – Debt sustainability, debt relief and restructuring Independent debt sustainability analysis should incorporate human rights impact assessments. Findings of human rights impact assessments should be used to inform debt strategies, debt relief programmes and restructuring negotiations, potentially triggering the latter where actual or potential adverse impacts are identified. Debt audits can contribute valuable information in conducting such assessments. Commentary 12.1 Structural adjustment programmes are often only oriented towards short-term fiscal targets to regain debt sustainability. Debt sustainability analysis is still based on a narrow understanding of sustainability, focusing primarily on the ability of a country to pay back its public debt without having to resort to exceptional financing or major policy adjustments. 12.2 The result is that sometimes a stock of public debt may be considered “sustainable” even if its service entails the State’s failure to comply with its human rights obligations because the resources necessary for servicing its debt deprive it of the financial means to realize human rights. Debt service payments should not compromise the promotion and fulfilment of human rights over time. 12.3 A more comprehensive definition of debt sustainability incorporates economic, social and environmental sustainability, meaning that debt sustainability is only achieved when debt service does not result in violations of human rights and human dignity and does not prevent the attainment of international development goals. 12.4 Debt cannot be called “sustainable” if the social and human rights dimensions of sustainability are ignored. Projections of repayment capacities of borrowing States need to ensure that the obligations of States to promote the Sustainable Development Goals and progressively realize economic, social and cultural rights can be effectively fulfilled. 12.5 Identification of actual or potential adverse impacts can guide decisionmaking on revision of repayment terms, on the volume of debt relief necessary to ensure that the obligations to respect, protect and fulfil all human rights can be met by States, and on the size and the distribution of losses incurred by different creditors’ groups. 12.6 Systematic, independent human rights impact assessments carried out within regular debt management work and sustainability assessments can also support early identification of where constraints on fiscal space due to debt servicing are leading to an undermining of States’ human rights obligations, notably towards women and other groups in situations of vulnerability. Findings can thereby contribute to timely debt restructuring, and mitigate the gravity and prevent adverse human rights impacts of economic crises. 12.7 In particular, in the context of − but not limited to − privatizations, it should be noted that States have an obligation to ensure that the fiscal risk of all debt is properly accounted for and on balance sheet and that private creditors similarly have an obligation to ensure that they do not undermine this obligation of any publicsector counterparty. The process and criteria by which States calculate the fiscal impact of certain privatization projects should be in accordance with industryrecognized best practices. 13