SECTION 5.3 – CIVIL SOCIETY AND PARLIAMENT: ADVOCACY AND ENGAGEMENT AROUND PUBLIC DEBT

Overview: This section focuses on the roles of parliament and civil society in advocating and engaging around public debt. It highlights key practices and examples of successful advocacy and engagement around debt justice, debit audits and debt transparency in different countries. Advocacy efforts in public debt management vary depending on a country’s debt situation. CSOs may focus on promoting debt justice to ensure fair treatment of debtor nations, conducting debt audits to expose illegitimate or mismanaged loans, or pushing for debt transparency to ensure public accountability in borrowing practices. This section will explore how each approach plays a key role in safeguarding sustainable debt management and ensuring that borrowing serves the public interest.

Public Debt: Roles of Civil Society—Some Examples

1. Advocating for Debt Justice:

• Debt justice refers to the fair and equitable treatment of debtor countries, ensuring that they are not subjected to unsustainable debt burdens that impede their development. Parliaments and civil society organizations (CSOs) play a crucial role in advocating for debt justice by holding governments accountable for their borrowing decisions and pushing for debt relief initiatives that prioritize the well-being of citizens.

Example/Video on Debt Justice:

9:09 – 12:56 Here is a clip from the Human Coined Podcast Ep. 11 “Debt Justice: The Role of Civil Society.” Introducing Tim Jones from Debt Justice UK, who discusses the call to action of a debt cancellation initiative in Zambia, the role of CSOs in initiating the call to the action, and the role of private sector lenders in debt justice.

18:28 – 19:33 Here is a clip from the Human Coined Podcast Ep. 11 “Debt Justice: The Role of Civil Society.” Introducing Tim Jones of Debt Justice UK, who details the role of international organizations and local organizations in the advocating for increased transparency in middle and low-income countries.

19:33 – 21:42 Here is a clip from the Human Coined Podcast Ep.11 “Debt Justice: The Role of Civil Society.” Introducing Tim Jones of Debt Justice UK, who explains what the mobilization of a campaign driven by civil society organization would look like, specifically noting the Credit Suisse Scandal in Mozambique.

Discussion Questions:

Your answers will be shared with the other e-course participants.

1. Does your CSO work on addressing public debt? Is it a priority issue?
2. Is your CSO in a debt justice alliance?
3. Do you know of any debt justice alliances?
4. What do you think are the benefits of joining a debt justice alliance?
5. Would your debt justice alliance be national or regional?

Upload your answers in the comment box provided below

2. Debt Audits:

• Debt audits are a crucial tool in assessing the legitimacy and sustainability of a country’s debt. A debt audit involves a comprehensive examination of a government’s debt obligations to determine their origin, structure, and impact on the economy and society. This process helps identify whether debts were contracted in a transparent, legal, and accountable manner, and whether they have contributed to the public good or merely served the interests of a select few.

• Debt audits can reveal cases of illegitimate or odious debt, where funds were misused, leading to calls for debt cancellation or restructuring. By scrutinizing the terms and conditions of loans, the actors involved, and the broader socio-economic implications, debt audits aim to ensure that public debt serves the interests of the population rather than exacerbating economic inequalities or burdening future generations.

Example/Video on Debt Audits:

3:15 – 5:42 Here is a clip from the Human Coined Podcast “Debt Justice: The Role of Civil Society (Part II).” Introducing Mae Buenaventura from the Asian People’s Movement on Debt and Development, who discusses the resistance faced in the campaign for a debt audit in the Philippines.

5:42 – 7:36 Here is a clip from the Human Coined Podcast “Debt Justice: The Role of Civil Society (Part II).” Introducing Mae Buenaventura from the Asian People’s Movement on Debt and Development, who is speaking on the reasons why the President of the Philippines vetoed a bill on implementing a debt audit in 2008 after it was passed by Congress.

12:50 – 14:29 Here is a clip from the Human Coined Podcast “Debt Justice: The Role of Civil Society (Part II).” Please welcome Mae Buenaventura from the Asian People’s Movement on Debt and Development, who will discuss debt audits in the region, focusing on their limited success in Asia.

3. Advocacy for Improved Debt Transparency:

What is Opaque Debt?

• Opaque debt refers to non-transparent lending and borrowing practices.
• Financial activities are not fully disclosed, making it difficult to track the flow of funds.
• Lack of transparency prevents governments and lenders from being held accountable for their financial decisions.
• Opaque debt can take various forms:
  • Unreported or incompletely reported debt: 44% of low-income countries have not published any sovereign debt data in the past two years.
  • Confidentiality clauses in loan agreements or non-market domestic debt issuance, which obscure the true size of a country’s debt.
  • Resource-backed loans: Often negotiated through state-owned enterprises (SOEs) and not classified as official debt.
• The issue of opaque debt is further complicated by:
  • Involvement of private creditors, whose lending practices lack sufficient transparency.
  • Initiatives like China’s Belt and Road Initiative, which often include confidential terms that prevent public disclosure. (NDI-OGP Policy Brief Series: August 2022)

Countering Opaque Debt: The Value of Transparency

The central solution to addressing opaque debt is enhancing transparency. Transparency, as defined by Transparency International, involves the clear disclosure of information, rules, plans, processes, and actions. In the context of debt, transparency ensures that borrowing decisions are based on complete information, which is critical for maintaining debt stability and macroeconomic health. Debt transparency enables governments to manage risks better, avoid high borrowing costs, and maintain public confidence. It also allows creditors and investors to accurately assess a state’s creditworthiness, reducing the risk premiums associated with uncertainty. A robust debt transparency framework is essential, including transparent debt reporting and clear, legitimate borrowing practices. The adoption of such frameworks has been shown to attract fresh investments by increasing state credibility. Furthermore, transparency is vital for holding governments accountable and ensuring that debt is incurred at the lowest possible cost and within acceptable risk boundaries.  

• Transparency in debt management is vital for building trust and ensuring that borrowed funds are used effectively. Parliaments and CSOs can advocate for the disclosure of debt information, including loan agreements, debt servicing schedules, and government guarantees. This information should be accessible to the public to enable informed discussions and decision-making.

The World Bank Debt Transparency Heat Map

As noted in Module 1:

• According to the World Bank, the Public Debt Transparency Heat Map assesses public debt dissemination practices in International Development Association (IDA) countries, including:
• Public debt statistics dissemination practices; and
• Publication of key debt management reports; and
• Publication of other countries’ relevant debt data, including contingent liabilities.

The heat map assesses whether the public debt statistics that are circulated are complete and provided in a timely manner, whether key public debt management documents are publicly available, and whether the government reports on all or just some contingent liabilities. (World Bank, 2023).