NEW YORK (26 October 2020) – A UN human rights expert warned of a looming debt crisis for some low and middle income countries as a result of the COVID-19 pandemic, and urged States and international financial institutions to respond quickly and effectively by providing debt relief and reforming the international debt architecture.
In her first report to the General Assembly, the UN Independent Expert on debt and human rights, Yuefen Li, underlined the need for “an effective set of measures and tools to avert a systemic debt crisis with even more devastating consequences to millions of already vulnerable individuals and communities”.
“No developing country has the capacity to carry forward with a debt crisis looming while they are dealing with health, economic, food and social protection crises due to the pandemic,” she said.
“Temporary debt standstill, emergency financing, debt restructuring and debt cancellation should be part of the tool box of States, international institutions and the private sector, in order to address debt issues quickly. The end game must be to free up fiscal space for investment in people’s acute needs,” she said.
“In order to flatten the COVID-19 infection curve and prepare for an equitable, resilient, greener and sustainable economic and social recovery from the pandemic, the debt problems have to be addressed as effectively and speedily as possible.”
More than 40 percent of low-income countries were already in debt distress or at high risk of debt distress prior to the onset of the pandemic. The majority of those countries were dependent on commodities and thus more sensitive to a collapse in commodity prices. Some middle-income countries also suffered from debt unsustainability, Li said.
“All Governments must focus on protecting and promoting human rights, and fighting inequalities in their response to COVID-19, in particular in their allocation of adequate/sufficient financial resources,” she concluded.
Ms. Yuefen Li (China) is the new Independent Expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights.
Prior to joining the UN in 1990, Ms. Li was a lecturer at the University of International Business and Economics in Beijing, China. At the UN Conference on Trade and Development (UNCTAD), she assumed various high-level positions and headed UNCTAD’s debt and development finance work. She also managed various projects including on Sovereign Lending and Borrowing and Globalization. Ms. Li has been guest professor at various universities including Tsinghua University in China. She has published books, papers and articles in professional journals and newspapers, UN publications and documents. She is currently Senior Advisor on South-South Cooperation and Development Finance at the South Centre.
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