MEFMI / UNCTAD Raise Awareness on Responsible Lending and Borrowing

The COVID-19 pandemic has presented unique fiscal challenges for many developing countries. In fighting the pandemic, developing countries around the world have accumulated historic levels of domestic and external debt at an unprecedented pace.  This in turn raised levels of external indebtedness by US$500 billion in 2020 alone, to a cumulative level of US$11 trillion by the end of 2021. Moreover, the world’s poorest countries have experienced some of the worst economic and social fallout, and are facing a wall of debt repayments up to 2030, drastically undermining their achievement of the Sustainable Development Goals.

As part of its series of activities on COVID-19, MEFMI in collaboration with the United Nations Conference on Trade and Development (UNCTAD) hosted a webinar on 6 April 2022 to facilitate an open dialogue for a better understanding of the strengths of the United Nations 15 Principles of Responsible Lending and Borrowing. The webinar discussed the implementation of these Principles within developing countries and explored ways in which these can be revitalised in the national context.

A total of 43 participants attended the webinar, of whom 20 were female (47 percent) and 23 were male (53 percent).  Four MEFMI member countries participated in the webinar, namely Eswatini, Tanzania, Zambia, and Zimbabwe. The workshop was attended by senior officials in public debt management and financial markets departments in the Ministries of Finance, Economic Planning and Development and Central Banks. It was also attended by representatives of permanent missions of various countries in Geneva, officials from UNCTAD and other international agencies.

Ms. Yuefen Li, a former UN Independent Expert on Foreign Debt and Human Rights gave an overview of the Principles and how they were promulgated, and their role in promoting responsible lending and borrowing. The other panellists were Ms. Thea Sofie Rusten Grastveit, a Policy Advisor in the Debt Justice Norway, and Mr. Jacob Mkandawire of the Bank of Zambia. Ms. Grastveit shared the experience of Norway in adopting the UNCTAD Principles in the operations of the country’s Sovereign Wealth Fund, while Mr. Mkandawire outlined the experiences of MEFMI member countries regarding the implementation of the Principles.

The webinar raised awareness on the importance for countries and creditors to adopt the Principles in order to ensure responsible lending and borrowing, with a view to achieving long term debt sustainability. In addition, the event highlighted the need for the Principles to be revitalised to encompass other emerging issues such as debt resolution, as well as the need for emerging lenders to align their behaviours and operations with the Principles.

As a way forward, MEFMI will work closely with UNCTAD on the process of revitalizing the Principles of Sovereign Responsible Lending and Borrowing, including capacity building of officials in member countries.

Prepared by: Cristina Dimande