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Financial institutions complicit in impact

GENEVA (10 September 2019) – Austerity measures imposed by international financial institutions such as the IMF, regularly cause violations of human rights, says UN Independent Expert on foreign debt and human rights, Juan Pablo Bohoslavsky in a report to be presented to the UN General Assembly in October.

“Even though austerity can be a useful tool of administration against the squandering of resources, it is essential to keep in mind that austerity impacts different social groups in very different ways, especially the most vulnerable and marginalised,” says Bohoslavsky.

“Although States are the main guarantors of human rights, international financial institutions can also be held responsible if they are complicit in prescribing policies with probable negative impacts on human rights,” the expert said.

“If international financial institutions can be made responsible for the preventable damage caused by a dam built with their funding, why should they not be responsible for the preventable human rights harm to people caused by regressive economic policies?”

Bohoslavsky said it was worth noting that the austerity measures promoted by the IMF and other international financial institutions were not for everyone, as they did not restrict payment of public debt to national and international foreign creditors. On the contrary, the restrictive monetary policies increase interest payments. “It is austerity for the poor, not for creditors”, he highlighted.

It isn’t surprising that the combination of economic deceleration and changes in fiscal policy negatively impact a wide range of human rights. “Unfortunately, austerity measures often lead to reduced food subsidies, and cuts in essential public services. They have a negative impact on salaries and on social investment like housing, infrastructure, health and education,” he says.

“From an economic viewpoint, there is no evidence that fiscal consolidation contributes to recovery. But there is much clearer evidence of the negative impact of structural adjustment programmes over economic growth, jobs, debt sustainability and, ultimately, equality,” Bohoslavsky says.

The Independent Expert extensively argues in his report that there is a solid legal basis on which to say that, in principle, austerity policies during times of recession are incompatible with obligations to guarantee the enjoyment of human rights.

International human rights law prevents countries from being forced to fully repay their debts at the expense of increases in child mortality, unemployment or malnutrition.

Bohoslavsky says the international financial institutions could be considered responsible for complicity with economic reforms that violate human rights. Legal responsibility for such complicity can lead to human rights obligations for these institutions such as cessation, guarantees of non-repetition and reparations.

The Human Rights Council, in March 2019, voted on the Guiding Principles on Human rights impact: assessment of economic reform policies. Section V of these principles explicitly addresses the role and responsibilities of international financial institutions. “This instrument can serve as a guide for present and future processes of economic reform,” Bohoslavsky said.

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