European Parliament adopts Resolution on Financing for Development supporting UNCTAD's work in the field of Sovereign Debt

19 May 2015

On 19 May 2015, the European Parliament in Strasbourg voted a Resolution on Financing for Development A-143/2015 calling for EU participation in the UN General Assembly process. The text was adopted with a majority of 19 votes in favour, 1 against, and 3 abstentions.

The resolution of debt crises can be a lengthy process; indeed, the EU still faces difficulties to reach a sustainable solution to the Greek situation and the ensuing crises. This can be partly attributed to the lack of a clear framework to tackle debt-related issues, which constitutes a glaring shortcoming in the international financial architecture, as was reminded by Nobel economist Joseph Stiglitz during the UNCTAD and Initiative for Policy Dialogue meeting at Columbia University in March 2015.

Sovereign debt issues constitute an important topic to be discussed at the third high-level International Conference on Financing for Development (FfD) to be held on 13-16 July 2015 in Addis Ababa, Ethiopia.

The Resolution adopted by the European Parliament in preparation for this conference supports UNCTAD's initiative on responsible sovereign financing and presses the EU to work towards the implementation the related Principles on Responsible Sovereign Lending and Borrowing.

Para 46 of this Resolution states that "sustainable debt solutions, including standards for responsible lending and borrowing, must be facilitated through a multilateral legal framework for sovereign debt restructuring processes with a view to alleviating the debt burden and avoiding unsustainable debt" and "asks the EU to engage constructively in the UN negotiations on this framework; urges the EU to push for the implementation of the UNCTAD principles of responsible sovereign debt transactions for both borrowers and lenders".

It is worth noting that the Principles on Responsible Sovereign Lending and Borrowing released in 2011 aim at promoting and reinforcing responsible sovereign lending and borrowing practices at the international level. They are a set of fifteen principles formulated with a view to reduce the prevalence of sovereign debt crises and to enhance economic growth.

These Principles have been open for endorsement since April 2012 and have so far been politically endorsed by thirteen countries. Other Member States have demonstrated interest in supporting the Principles and their endorsement is currently under discussion.