Towards new Guiding Principles: United Nations discusses the human rights impact of economic reforms

Added 01 Mar 2018

This week, the UN Independent Expert on foreign debt and human rights presented a report to the Human Rights Council on the development of guiding principles to put human rights at the forefront of economic policy-making in moments of crisis. As the enjoyment of universal human rights continues to be undermined by austerity and irresponsible sovereign lending and borrowing, is the IMF taking full responsibility for its role in ensuring governments meet their obligations under international human rights law?


Economic reforms turn a blind eye to human rights

Evidence of the damaging impact of austerity on human rights across the globe continues to mount. From the legacy of IMF structural adjustment in indebted low-income countries, to the effects of public spending cuts across Europe in the wake of the 2008 financial crisis, the costs of so-called fiscal consolidation are still being disproportionately carried by the poorest and most vulnerable. In recent weeks alone, people have taken to the streets in Tunisia, Jordan, and Sudan to protest against falling living standards resulting from economic policies aimed at reducing government deficits. In the case of Sudan – currently in hock to the IMF for close to $1.5bn – the violent response of the authorities to the protests raised serious concerns over further human rights violations. A common, reported motivation for each of these protests? Government moves to remove food and fuel subsidies in line with IMF loan conditionalities.


A long way to go for the IMF 

Human rights bodies have repeatedly been calling out the IMF for undermining the enjoyment of human rights through its loan conditionality and policy advice. But the positive signals emanating from the Fund’s research work, for instance on the impact of fiscal policy on income inequality and the significance of public expenditure on health and education, still appear to be heralding a false dawn: the Fund continues to pressure governments into economic reforms that weaken social protection, for example, and risk them backsliding on their obligations to safeguard rights.

The IMF has also resisted longstanding calls from civil society to adopt a human rights approach when assessing the sustainability of the debt held by developing countries. Recent reforms, such as the reworked World Bank-IMF Debt Sustainability Framework and its brand new Guidance Note, sadly only pay lip-service to the need to take human rights and social protection 'standards' into account when the IMF games the possible impact fiscal consolidation policies will have on a country’s future capacity to repay debts. Eurodad continues to recommend that debt sustainability analyses include a mandatory human rights impact assessment (HRIA), and that findings that point to actual or potential adverse human rights impacts should serve to trigger debt restructuring processes. In this way, the primacy of national and international human rights obligations, above and beyond purely financial considerations about debt servicing, can be exerted.


Towards new UN Guiding Principles on human rights and economic reforms

This week, the UN Independent Expert on foreign debt and human rights, Juan Pablo Boholavsky, is presenting a report to the Human Rights Council that aims to ensure states and international financial institutions (IFIs) are better equipped to do just this.

His report lays out his work to develop guiding principles for ‘assessing the human rights impact of economic reform policies’, and includes a concise look at the legal and economic arguments for why human rights should systematically guide the design of debt reduction policies. Importantly, the Independent Expert considers how HRIAs should be used, recognising the practical challenges facing policymakers, and spelling out why a human rights approach can support better policy making in times of crisis. He notes that ex ante HRIAs can also provide an evidence base to support governments in their negotiations with IFIs and creditors, strengthening their arguments for safeguarding specific areas of government spending when discussing debt management strategies or restructuring. (The recent news from Mongolia and Kyrgyzstan makes it demonstrably clear why such additional analytical support might be beneficial to governments.)

The report also briefly reviews existing impact assessment methodologies, such as the World Bank’s Poverty and Social Impact Analyses, drawing on lessons learned to set out a pragmatic framework around which HRIAs need to be built – covering elements such as their legal basis, scope and timing. The Independent Expert will, over the coming months, now develop substantial procedural guidance in the form of a full set of guiding principles for states and IFIs on how to undertake HRIAs. The guiding principles will be presented to the Human Rights Council at the end of the year.


Changing practice?

Debt reduction need not be done on the backs of the weakest, but this requires at least an attempt to consider the potential and actual adverse impacts that fiscal adjustments and austerity policies may have on human rights, and to develop credible alternatives. The IMF has a critical role in making these attempts systematic, and translating them into tangible policy advice that promotes and safeguards universal human rights. Indeed, it is itself ‘obligated to act in accordance with the principles’ of the UN Charter and can’t escape its responsibility for ensuring borrowing states can meet their duties under international law. The UN Human Rights Council is developing the tools that can equip it to do so, hopefully the IMF is preparing to use them.