On 9 March 2020 Lebanon defaulted on a $1.2 billion bond payment. Prime Minister Hassan Diab announced that foreign currency reserves had hit a “critical and dangerous level” and called for fair negotiations to restructure the debt.
Tim Jones, Head of Policy at Jubilee Debt Campaign, welcomed the news saying: “It is good that Lebanon has finally defaulted on the debt, rather than continuing to pay and be in an even worse position in a few months’ time. For the people of Lebanon to recover from the current debt crisis requires large write-downs of debt by international creditors.”
Jubilee Debt Campaign has warned since 2015 that Lebanon is in a debt crisis, given the huge scale of its international debt payments. External government debt payments are currently over 40 per cent of government revenue.
Lebanon’s bonds do not contain so-called 'Enhanced Collective Action Clauses'. This means it is easier for a vulture fund to buy a significant proportion of a particular bond issuance and block any debt restructuring agreed by a majority of bondholders. The exact terms of these contracts are unclear due to the lack of transparency.
Tim Jones continued: “Lebanon’s debt crisis shows the continued lack of legal systems to prevent vulture funds holding up necessary debt restructurings, and how opaque government debt can be. Key jurisdictions such as London and New York need to pass laws which ensure a minority of creditors cannot block debt restructurings, and to make key information on all loans to governments publicly available once contracts are signed.”
Juan Pablo Bohoslavsky, UN Independent Expert on foreign debt and human rights also expressed his support of the decision by the Lebanese Government, and urged Lebanese authorities to put human rights at the centre of any future financial negotiations.
“In light of the human rights concerns expressed for months by the people in the streets of Lebanon, the decision of the Government to postpone the payment of its foreign debt is in line with human rights standards,” said Bohoslavsky. “State authorities correctly link the issue of foreign debt repayment to its impact on the economic and social rights of the Lebanese people. The primary duty of the State is to respect, protect and fulfil the human rights of its population.”
The UN expert urged the Lebanese authorities to consider the consequences of any future negotiations with creditors and financial institutions on the human rights of the population, including poverty and inequality.
“Creditors and debtors should engage constructively with Lebanon in debt relief and restructuring negotiations with the aim of safeguarding the Government’s capacity to meet its human rights obligations”, he noted. “A relevant tool in this context is certainly the Guiding Principles on human rights impact assessment of economic reforms.”
“A human rights approach to finance is crucial to sustainably address the legitimate demands that Lebanese people have expressed in the streets”, Bohoslavsky said.
* Jubilee Debt Campaign https://jubileedebt.org.uk/
* Office of the High Commissioner for Human Rights https://www.ohchr.org/EN/Pages/Home.aspx
[Ekk/6]
Diaspora*
Digg
Reddit
Newsvine
Technorati
StumbleUpon