A/HRC/41/51 Activities of vulture funds hinder the capacity of a State to fulfil economic, social and cultural rights 65. Litigation by vulture funds represents a substantial burden on the budgets of already poor countries. Harmful conditions of loans or high and abusive interest rates may make repayment extremely difficult. The State having to repay far more than the amount originally borrowed may be obliged to redirect resources into debt service that had been previously allocated to essential public services or even worse, to introduce long-term austerity policies (ibid., para. 59). Such a course of action hinders the capacity of a State to fulfil economic, social and cultural rights (namely to adopt appropriate measures towards their full realization) and, ultimately, has an impact on the economic growth and development of the country.57 66. 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 (about 40 per cent) allocated for foreign debt servicing seriously limited the resources available for the effective enjoyment of economic, social and cultural rights (E/C.12/1/Add.100, para. 9). 67. 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 had to sell the maize from its national food reserve agency to raise the funds needed to repay loans. Unfortunately, a poor harvest that year, left 7 million people, out of a population of 11 million, facing serious food shortages (A/HRC/11/10, para. 30). Activities of vulture funds jeopardize international poverty reduction initiatives 68. The ability of vulture funds to jeopardize the objectives of the IMF and World Bank Heavily Indebted Poor Countries Initiative is striking, particularly bearing in mind that it aims to ensure the debt sustainability of poor countries. 58 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. That situation has led human rights monitoring bodies to urge the States concerned to reallocate international development aid and other resources to priority sectors and to ensure that international development aid is used for the progressive realization of the rights to an adequate standard of living (see, for example, E/C.12/COD/CO/4, para. 29). 69. A good example is the case of the Democratic Republic of the Congo. In 2014, a district court in the United States ruled that the country 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. 59 On the basis of the improved fiscal situation resulting from international debt reduction programmes, the country was ordered to pay the claims of the vulture funds. This example shows how domestic rulings can clearly 57 58 59 14 The obligation of a State to fulfil requires positive measures when other measures have not succeeded in ensuring the full realization of such rights and can entail issues such as public expenditure, governmental regulation of the economy, the provision of basic public services and infrastructure, taxation and other redistributive economic measures. See OHCHR, Economic, Social and Cultural Rights: Handbook for National Human Rights Institutions (United Nations publication, Sales No. E.04.XIV.8), p. 18. The scheme was first launched in 1996 and was supplemented in 2005 by the Multilateral Debt Relief Initiative. See Themis Capital, LLC and Des Moines Investments Ltd. v. Democratic Republic of Congo and Central Bank of the Democratic Republic of the Congo, 14 July 2014.