RESOURCES

The Responsible Lending and Borrowing Imperative: Addressing the Root Causes of Poverty

WINTER 2011/2012
The Responsible Lending and Borrowing Impertive: Addressing the Root Causes of Poverty

Summary:

For over two decades, the international community has implemented a series of measures to address unsustainable debt burdens in low-income countries (LICs). While milestone achievements in debt relief have been made, the ongoing impact of unsustainable debt burdens on LICs’ development still demands redress. Debt relief and cancellation are necessary but not sufficient. There are serious implications that a lack of transparency, accountability, and respect for democratic processes and information-sharing has in loan contractions and international financing. Holistic reflections on the interplay of political, economic and institutional factors (domestic and external) that contributed to the creation of the debt crisis must be reanalyzed in order to develop long-lasting solutions to the root causes of structural and chronic poverty.

In the post-debt crisis, a number of debt audits have been undertaken by both governmental and civil society organizations around the world. Conducted as a means of holding governments’ accountable to their citizens while increasing the transparency and accountability of governments’ financial transactions, these debt inquests should help to assess current debt, decrease the amount of future debt accumulated, and identify means of ensuring that future loans are beneficial, repayable, contracted transparently and are supported by the recipient nation’s citizens.

This study synthesizes concrete proposals of how the U.S. government can implement responsible lending and borrowing principles that would promote democracy and pro-poor development. Responsible lending and borrowing would contribute to the achievement of the Millennium Development Goals (MDGs) for the world’s poorest. As a means of demonstrating the need for more responsible lending and borrowing practices, this study integrates examples from around the world that illustrate the problems of the current system and the manner in which unsustainable debt could have been avoided had such principles been taken into account by creditors before approving or granting loans.

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About the Authors:

Privilege Haang’andu (Priva)

Privilege Haang’andu (Priva) is a graduate student of Political Science at Marquette University, Wisconsin. He holds a BA Honors degree in Political Philosophy from the University of Zimbabwe. Priva has extensive experience with the Jubilee Movement having spent some time working on debt-cancellation campaign with Jubilee-Zambia. He has written and presented several papers internationally and he has worked closely with the Zambian legislators and government.

Aldo Caliari

Director, Rethinking Bretton Woods Project

Originally from Argentina, Aldo Caliari has a Master of International Policy and Practice from George Washington University (2007), with a focus on economics and finance. He also holds a Masters Degree from the Washington College of Law, American University, on International Legal Studies (2000), where he was honored with the Outstanding Graduate Award. He earned his first law degree in Argentina, at the Universidad Nacional de Tucuman Law School, in 1997. Before graduating, he represented his University at the II Inter-American Human Rights Moot Court competition, held at the Washington College of Law, American University (Washington DC, 1997), winning several awards. Since 2000 Aldo has been staff at the Center of Concern’s Rethinking Bretton Woods Project where he has focused on an array of issues such as global economic governance, debt, international financial architecture, human rights in international economic policy and linkages between trade and finance policy. He has done considerable public speaking for a variety of audiences that range from popular workshops to academia and closed government briefings. His writings have been published in books, academic and specialized journals and the media. He has been a consultant to several intergovernmental organizations -- such as UNCTAD, UNDP, UN DESA, the Office of the High Commissioner for Human Rights— in addition to governments, civil society networks and foundations.

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