Debt Management for Development

Debt Management for Development

Protection of the Poor and the Millennium Development Goals

Kunibert Raffer

This book exposes intolerable global double standards in the treatment of debtors and argues that fairness, economic efficiency and principles common to all civilized legal systems, must and can be applied to so-called ‘developing countries’, or Southern sovereign debtors.

Preface

Kunibert Raffer

Subjects: development studies, development economics, economics and finance, development economics

Extract

Unsustainable debts have been an important development barrier and a heavy burden for most Southern countries (SCs), restricting their policy space and causing avoidable misery to the poorest. Over decades creditors have dictated ‘solutions’ unhampered by the Rule of Law or basic legal principles and without solving the problem. Interestingly Southern sovereign debtors were once treated fairly decently: before the Bretton Woods Institutions and the Paris Club, a creditor cartel took over as ‘debt managers’. The present financial crisis caused by neoliberal greed and ‘liar loans’ (in the USA, not the South) is likely to impact very negatively on Southern debtor nations. Adequate protection of debtors in distress, their human dignity and human rights, part and parcel of any civilized legal system, were totally denied to the South over decades. The ‘lemon squeezer’ model of debt management put debt service over human needs, causing part of the misery the MDGs are now to reduce. Changes for the better have occurred recently. Anti-poverty measures have become part and parcel of creditor dominated ‘solutions’. After being forced by creditors to introduce school fees or cost recovery schemes in the basic health sector in order to be capable of repaying a few dollars more, SCs are meanwhile encouraged by the same creditors to reduce or abolish these charges. Official creditors continue to deny the fundamental right to neutral and disinterested judges to SC debtors and the globe’s poorest, the cornerstone of the Rule of Law and a matter of course for anyone else....