United Nations General Assembly to vote on debt restructuring principles

09 September 2015

In response to Argentina's "vulture funds" crisis and growing concerns about sovereign debt problems elswhere, the United Nations General Assembly tasked UNCTAD with ways to improve sovereign debt restructuring processes.

After years of deliberations on how to resolve problems in international debt restructuring practices, the United Nations General Assembly will vote on 10 September on draft resolution A/69/L.84, which provides nine basic principles on which all debt restructurings should be based.

UNCTAD has been calling for fairer and more efficient measures to deal with sovereign debt problems since the late 1970s when it pushed for explicit principles for debt restructuring (TD/AC2/9) and subsequently, following the Latin American debt crisis, promoted the idea of international bankruptcy rules to match those in Chapters 9 and 11 of the United States Bankruptcy Code.

However, 40 years later, international debt restructuring practices still suffer from a number of deficiencies, leading to protracted debt restructuring negotiations with often unpredictable outcomes.

During the past year, discussions have been taking place in the United Nations General Assembly on ways to improve sovereign debt restructuring processes, and UNCTAD was called upon to provide substantive support to these negotiations.

In the run up to the vote on 10 September, eminent figures from academia and public life including former Greek finance minister Yanis Varoufakis and economist Thomas Piketty expressed support for the adoption of the UN resolution and UNCTAD's work on this topic in a letter published in The Guardian on 8 September and Le Monde on 9 September.