Study Session 4

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Study Session 4

• Avoiding Illegitimate Debt and Transforming the
  International and National Financial
  Architecture
• Towards Principled / Responsible / Alternative /
  Financing

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1. Starting the Debate Responsible or
Alternative Finance?

• Groups have a range of perspectives on this
  debate
• Some argue Lending is a reality for the
  forseeable future we need to put strong
  constraints/demands on lenders.
• It is inconsistent to argue for cancellation or
  repudiation of illegitimate debt accrued over the
  past 25 years, while doing nothing to avoid the
  accumulation of new illegitimate debts in the
  next 25 years.
• Jubilee Zambia We support Responsible Financing
  in which the need for an international framework
  governing the circumstances and procedures for
  loan contraction, management or on-sale of debts
  is administered by a framework of good principles

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1. Starting the Debate Perspectives on
Responsible v. Alternative Finance

• Other groups argue that we should not engage
  current lenders,and instead focus on creating
  wholly new sources of alternative finance.
• Concern that making demands on World Bank, IMF,
  other lenders will legitimize their role the
  demands will be too technical rather than the
  transformation that is needed.
• We think that the World Bank, the IMF, and the
  WTO must disappear and be replaced by regional
  financial structures truly controlled by the
  people. PAPDA Haiti
• But this discourse is no necessarily conflicting
  work towards both responsible and alternative
  financing is critical.

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2. Responsible lending/ borrowing Increasing
importance for civil society

• Post-HIPC Countries in Africa. Governments are
  continuing to borrow due to lack of other
  options. Strong new work from civil society to
  engage parliaments, civil society in loan
  contraction process, responsible borrowing

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2. Responsible lending/ borrowing Increasing
importance for civil society

• Eurodad has proposed new Charter for Responsible
  Lending which urges strong constraints on lenders
  to assure new loans/finance do not undermine
  human rights nor lead to the creation of new
  illegitimate debt
• Debt audits are not only looking at old debts
  but are also expected to recommend changes on how
  lending/borrowing should be done in the future

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3. Responsible Lending On the Official Agenda

• Growing official discourse on responsible lending
  largely limited to concerns to avoid
  re-accumulation of debt post HIPC. Issue of
  so-called new lenders emerging role of China,
  India, Venezuela, etc.
• Discussion on responsible lending underway
  within G-8, G-20, OECD, World Bank, UN Financing
  for Development, etc.

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3. Responsible Lending On the Official Agenda

• Civil society has different view of responsible
  lending unlike official view which focuses
  mainly on quantity of future lending, civil
  society demands better quality of new loans to
  avoid creation of new illegitimate debt in the
  future
• Some groups see official openings as an
  opportunity (that we are currently largely
  missing) to put forward our strong demands on
  responsible finance and influence official
  debate. Others worried engagement will legitimize
  these institutions.

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4. Alternative Financing

• The Bank of the South is a possible other area to
  address the question of future financing on more
  equitable terms.
• Civil society has developed frameworks and
  demands surrounding the creation of the South
  Bank. These demands are in some ways similar to
  demand such as the Eurodad Charter. Possible to
  develop global unities around responsible /
  alternative financing?

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Study Session 4 Break out Groups

• Group 1 Responsible borrowing / Loan
  contraction process in South countries
  (Facilitator Lidy) 5 - Location tv room
• Group 2 - Responsible Finance mainly addressed
  to lenders (Facilitator Neil / Rapporteur Alex)
  10 or so - Location TV room
• Group 3 Alternative Finance structures
  developed in South (Facilitator Rocio /
  Rapporteur Fabrina) 20 Location THIS ROOM
• Key question for groups to discuss
• 1. In the area you are looking at, what are key
  principles civil society can agree are needed to
  avoid the creation of illegitimate debt in the
  future?
• 2. How can we engage in a way that does not
  legitimize governments/institutions that we think
  are illegitimate or imperfect?
• 3. Do we think all 3 approaches (rep. borrowing/
  resp. finance/ alt. finance) can be made
  coherent in some way?