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Briefing: Out of Service: How public services and human rights are being threatened by the growing debt crisis.

Added 20 Feb 2020
Public services play a critical role in advancing human rights and fighting inequality. However, growing levels of external public debt, especially in the global south, threaten the very services on which citizens depend in order to have even a basic standard of living.
 
External debt levels are once again increasing around the world and a new wave of debt crises is unfolding. The current trend of addressing debt sustainability problems through neoliberal austerity policies reduces, rather than increases, available economic resources. The resulting budget cuts and the promotion of privatisation strategies, including via public-private partnerships (PPPs), ultimately endanger the capacity of public services to advance human rights and achievement of the Sustainable Development Goals (SDGs), including women’s rights and gender equality.

This report takes a closer look at the impact of debt crises on public services and how in impoverished countries in particular there is a negative impact on people’s rights – particularly on the rights of women.

When existing gender inequalities, along with women’s practical and strategic needs and interests, are taken into consideration in public services design, they can help address the barriers women face in a range of sectors and situations. But when resources for public services are not available, achieving gender equality becomes extremely difficult. 

A deteriorating debt landscape

Since 2011, general government gross debt to GDP ratios have increased across all regions in the global south. The snowballing growth in public debt has been triggered by a number of factors, including: a lending boom triggered by the monetary policies introduced in the global north in response to the 2008 financial crisis; the increasing issuance of sovereign bonds by low- and middle-income countries; the increasing credit available from non-traditional bilateral lenders; and, especially since 2014, volatile commodity prices. As a consequence, public debt service on external debt has been growing in low- and middle-income countries, not only due to an increase in the amounts borrowed, but also due to higher borrowing costs.

This report outlines how: 
  • Between 2010 and 2018, external debt payments as a percentage of government revenue grew by 83 per cent in low- and middle-income countries, from an average of 6.71 per cent in 2010 to an average of 12.56 per cent in 2018.
  • In Sub-Saharan Africa specifically, the proportion of government revenue destined for external debt service payments more than doubled, from 4.56 per cent in 2010 to 10.8 per cent in 2018. Such an increase threatens to undermine gains seen in the region following debt relief under the Heavily Indebted Poor Countries (HIPC) and Multilateral Debt Relief (MDRI) initiatives of the late 1990s and early 2000s.
  • Additionally, at least 20 governments in the global south spent more than 20 per cent of their revenue to service external debts in at least one of the last five years. In some cases, such as in Angola, Djibouti, Jamaica, Lebanon, Sri Lanka or Ukraine, more than 40 per cent of government revenue was destined for external public debt service at some point between 2014 and 2018. Worryingly, in most cases, this is due to an increase in debt payments, rather than a decrease in revenue, and IMF projections do not indicate a reversal of this trend in coming years.
Download the briefing here