A/HRC/20/23 I. Introduction 1. The issue of foreign debt and its impact on human rights and development, particularly in developing countries, has preoccupied the international community for more than three decades and although a number of official initiatives to address it have been implemented over the years, these have failed to deliver an equitable and enduring solution in line with the political commitments reflected in various resolutions and declarations, notably the Millennium Declaration1 and the Monterrey Consensus of the International Conference on Financing for Development.2 Moreover, the debt of these countries has continued to grow and to constrain not only their development prospects but also to undermine their capacity to establish the conditions for the realization of human rights, particularly economic, social and cultural rights. 2. The total external debt of emerging and developing economies rose from US$2,678.4 billion in 2003 to US$5,414.6 billion in 2010 and is projected to rise to US$6,446.3 billion in 2012.3 Debt service payments rose from US$795.2 billion in 2003 to US$1,743.7 billion in 2010, and were projected to rise to US$2,010.8 billion and US$2,265.5 billion in 2011 and 2012 respectively. In 2003, the total external debt of the Heavily Indebted Poor Countries (HIPCs) – those countries whose debts are deemed “unsustainable” by the International Monetary Fund (IMF) and World Bank - was US$172 billion. In 2010, it decreased marginally to US$147.9 billion, ostensibly due to international debt relief. However, it was projected to rise to US$163.3 billion in 2011 and US$178 billion in 2012 largely as a consequence of new loans taken out to mitigate the impacts of the global financial crisis. Additionally, as recent events in Europe suggest, debt problems are not the exclusive preserve of developing countries.4 3. The Independent Expert accepts that, depending on a variety of factors, such as responsible lending and borrowing, the loan terms and conditions, prudent use of loans and proper debt management, debt financing can contribute to countries’ economic development and the establishment of conditions for the realization of human rights. 5 Nonetheless, empirical evidence shows that in many of the poorest countries the fulfilment of debt service obligations is often undertaken at the expense of social investment, including investment in services that contribute to the realization of human rights.6 In 1 2 3 4 5 6 General Assembly resolution 55/2, paras. 11-16. Report of the International Conference on Financing for Development, Monterrey, Mexico, 18-22 March 2002, (A/CONF.198/11), chap. I, paras. 47, 51 and 60. International Monetary Fund (IMF), World Economic Outlook, September 2011, available from www.imf.org/external/pubs/ft/weo/2011/02/pdf/tblpartb.pdf. In recent years, Europe has experienced a series of debt crises affecting Iceland, Ireland, Greece, Spain and Portugal. See Human Rights Council, Consolidation of findings of the high-level task force on the implementation of the right to development, (A/HRC/15/WG.2/TF/2/Add.1), para. 52. For example, in 2004, Ecuador’s external debt was US$16.9 billion and its debt service payments amounted to US$3.7 billion (more than six times its expenditure on health care); in 2006, Kenya spent more on debt servicing than on health; in 2006, the Philippines spent over 32 per cent of its annual budget on servicing interest payments compared with around 14 per cent on education and 1.3 per cent on health. See Jubilee Debt Campaign, Debt and Health, Briefing (2007), available from www.jubileedebtcampaign.org.uk/Debt3720and3720Health+3795.twl; Jubilee Debt Campaign, Debt and Education, Briefing (2007), available from www.jubileedebtcampaign.org.uk/Debt3720and3720Education+3198.twl; and Jubilee Debt Campaign, Debt and Public Services, Briefing (October 2007), available from www.jubileedebtcampaign.org.uk/Debt3720and3720PublicServices+3704.twl. 3