Several well-placed sources at the United Nations Conference on Trade and Development in Doha, Qatar, have revealed that the UK is blocking discussion of principles on how governments can lend and borrow responsibly.
This is part of attempts by the UK and others to marginalise the role of the UN in global economic reform.
Tim Jones, Policy Officer at Jubilee Debt Campaign, said:
“It is appalling that the UK wants to stop countries discussing in the UN how to lend and borrow money responsibly. Excessive and irresponsible debt has caused crises across the world for the last thirty years. Time after time the UK has told us they are committed to responsible lending, but refuse to put their money where their mouth is.
“The UK government has a history of grossly irresponsible lending, from giving loans to the Zimbabwean police to buy British made Land Rovers in the late 1990s, to loans for Saddam Hussain to buy British weapons in the 1980s. For the last few years, the UK government has been lending already heavily indebted countries money to cope with the impacts of climate change caused by others. The UK’s actions fan suspicions that it wants to continue this dreadful legacy of creating unjust debt.
“The UK has consistently tried to marginalise UN bodies in global economic reform, despite the fact the UNCTAD has a much better record than the IMF of predicting financial crises and advocating policies which could assist the building of a fairer world. The UK continues to push the role of the IMF, despite the appalling impacts of its policies in the global South and now in Europe too.”
Over recent years, UNCTAD – the UN body that has consistently focused on global economic reforms to benefit development – has been working up principles of how governments should behave when borrowing and lending money. These draft principles include:
- Lenders are responsible for making a realistic assessment of the borrower’s ability to repay a loan
- Lenders financing a project should perform their own investigation into the likely effects of the project, including financial, social and environmental impacts
- Borrowers should be transparent and ensure proper approval and oversight of state borrowing
- Borrowers should weigh the costs and benefits of loans
At the talks in Doha, the UK has been insisting that reference to these principles is removed from UNCTAD’s mandate, potentially removing UNCTAD’s ability to work on them further with member states.
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The UNCTAD draft principles on responsible lending and borrowing include:
“A lender is responsible for making a realistic assessment of the sovereign borrower’s capacity to service a loan based on the best available information and following established technical rules on due diligence. Lenders financing a project in the debtor country should perform their own investigation into the likely effects of the project, including its financial, operational, civil, social, cultural, and environmental implications. The process for obtaining financing and assuming sovereign debt obligations and liabilities should be transparent. Governments should put in place arrangements to ensure the proper approval and oversight of official borrowings and other forms of financing, including guarantees made by State-related entities. Governments should weigh costs and benefits when seeking sovereign loans. They should seek a sovereign loan if it would permit additional public or private investment, with a prospective social return at least equal to the likely interest rate.”