Chapter 4 | Page 166
these investments in human and physical assets must be seen as positive
contributions to the realisation of human rights.121
Another key factor which influences the ability of States to protect human
rights, particularly ESC rights such as an adequate standard of living, is the
amount of liquidity in global financial markets,122 which impacts the ability of
the State to borrow. Given these challenges in debt management, States must
look to developing a more diverse borrowing and bond portfolio, including
GDP-indexed bonds, as well as establishing macro markets to help manage
bonds-based debt more effectively. Such arrangements enable bonds to be
indexed to key macroeconomic aggregates and allow bond-holders to hedge
against risks of market volatility.123 For such hedging to be effective, States
need to extend their bond instruments to the global financial market. For many
developing States, however, these policy options are extremely difficult to
implement due to limited capacity and associated risks.
Multinational mechanisms, such as the Joint World Bank–IMF Debt
Sustainability Framework for Low-Income Countries (DSF), help guide donors
and recipients to manage debt transactions without creating excess burden on
borrowers. For example, the DSF pays attention to the way lending and
borrowing decisions are made, including matching financial needs with the
current and future ability of the borrower to pay, based on economic
circumstances and projected debt burden.124 The recently revised DSF also
includes further indicators of the ability of the borrowers to repay their external
debt obligations, including the level of capital flow and remittances from
121
Balakrishnan et al, above n 53, 17. Discussions on debt forgiveness (HIPC, Paris Club),
AID for Debt programmes and similar aspects of debt management in partnership with
international community are presented in Chapter 5, in the context of international
assistance and cooperation.
122
Dowell-Jones and Kinley, above n 69, 186.
123
See, Inge Kaul and Pedro Conceição, 'The Changes Under Way: Financing Global
Challenges Through International Cooperation Behind and Beyond Borders' in Inge Kaul
and Pedro Conceição (eds), The New Public Finance: Responding to Global Challenges
(The United Nations Development Programme, New York, 2006) 26.
124
International Monetary Fund, The Joint World Bank–IMF Debt Sustainability Framework
for Low-Income Countries (15 April 2015) <https://www.imf.org/external/np/
exr/facts/jdsf.htm>.
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