Dr Stephen Connelly and Dr Celine Tan, Readers in Law at the School of Law, University of Warwick and Co-Directors of the Centre for Law, Regulation and Governance of the Global Economy (GLOBE), submitted evidence to a parliamentary inquiry on debt and development. The inquiry examines the impact of high levels of debt on development in low-income countries and the tools and strategies employed to reduce the debt burden. The evidence was submitted with Dr Karina Patricio Ferreira LimaLink opens in a new window, Lecturer in Commercial Law at the School of Law, University of Leeds.

Launched by the House of Commons International Development CommitteeLink opens in a new window (IDC), the inquiry aims to examine the high levels of sometimes unsustainable national debt in low-income countries (LICs), much of which is owed to private sector creditors in high-income countries such as the UK and impact of the debt on development. The inquiry also focuses on the tools the UK government uses or could use to help bring debt levels in low-income countries down to more sustainable levels.

In their submission, published on the IDC website, Dr Connelly, Dr Patricio Ferreira Lima and Dr Tan, argue that ‘the existing fragmented and highly politicised regime for sovereign finance law and governance is exacerbating the sovereign debt crises in low-income countries’ and that a ‘key area of concern is the lack of appropriate mechanisms to deal with the burgeoning debt owed by sovereigns to ‘private creditors’. The authors propose ‘an opt-in statutory standstill which will place LICs in a fairer position to negotiate debt relief with creditors’. They signposted the Committee to a proposal they had developed in 2020 for a statutory stay on recovering commercial debt repayments to free up resources in indebted countries to fight the COVID-19 pandemic. The authors believe that this proposal can be adapted to the current debt initiatives, such as the G20 Common Framework for Debt Treatments beyond the DSSI.

Dr Connelly and Dr Tan said of their participation in the inquiry: “We have been working together with Dr Patricio Ferreira Lima since 2020 on the legislative solutions that the UK Parliament could adopt to contribute towards ensuring private creditor involvement in sovereign debt restructuring, particularly of low-income countries. We believe that the UK government can play a significant role in dealing with the sovereign debt crisis in low-income countries that are currently exacerbated by intersecting food, energy and climate-related crises that are impacting on social and economic development across the developing world. We are delighted to participate in this inquiry and hope to further contribute to parliamentary initiatives in this area”.

Read more about the authors’ work here.