Sovereign Debt, Human Rights, and Policy Conditionality

This chapter explores whether conditionality arrangements that would make the conferral of debt relief depend on whether the debtor country achieves a certain status with respect to the human rights fulfilment of its population can be justified. It argues that many objections that are typically advanced against conditionality arrangements are unconvincing, and that the possible benefits of human rights conditionality are sufficient to warrant serious intellectual and practical exploration. Sovereign debt raises serious human rights concerns, however, when very high levels of debt significantly limit the ability of countries to manage their affairs effectively. Any human rights conditionality in which creditors, or countries in which creditors are influential, determine whether there has been compliance with these standards and decide whether it is justified to withhold relief, would clearly lend itself to opportunistic misuse. A conditionality arrangement may involve unfair procedures if such authority is improperly allocated.