An analysis of the impact of debt service on human rights: three scenarios

Background

When government revenue is diverted to service debt, this negatively impacts the government’s ability to meet human rights obligations. However, creditor and debtor countries hold divergent views on whether debt is a human rights issue, with creditor countries asserting that these are contractual agreements that are economic and technical in nature. Here, we try to answer the following question: should public and publicly guaranteed debt be considered a human rights issue, and explore the pathways by which debt service may impact human rights?

Methods

We conducted a literature review to explore the pathways through which debt service impacts human rights. We then consider three scenarios: the impact on human rights of a reduction in government external debt service to 5%, 10%, and 14% of government revenue in those countries where debt service is above these levels. As debt repayment varies by year, we used the average debt service between 2022-2024, from the Debt Justice UK dataset (collated from the World Bank and IMF sources), which includes external public and publicly guaranteed debt, and IMF repurchases and charges. To translate the impact of debt services on human rights and governance in a country, we used the Government Revenue and Development Estimations (GRADE), a model which translates the impact of a change in government revenue per capita on access to economic and social human rights. Additional revenue also improves governance indicators, and we analyse this impact.

Finding

Scenario 1: If debt service was reduced to 5% of government revenue in countries where it is above this threshold, an additional 33 million people would use basic sanitation (15.75% of those without access) and 17 million would drink clean water (16.84% of the people without access). Five million additional children would attend school, and there would be 380 thousand additional teachers. 59 thousand additional children and almost 8 thousand mothers would survive. There would be an improvement in governance indicators in all countries.

Scenario 2: If debt service was reduced to 10% of government revenue in those countries where it is above this threshold, an additional 23 million people would use basic sanitation (12.45% of those without access), and 11 million would drink clean water (17.58 % of the people without access). Three million additional children would attend school, with 251,000 additional teachers. 38 thousand additional children and 5.5 thousand mothers would survive.

Scenario 3: If debt service was reduced to 14% of government revenue in those countries where it is above this threshold, an additional 16 million people would use basic sanitation (13.39% of those without access), and 7 million would drink clean water (16.45 % of the people without access). Two million additional children would attend school, with 171,000 additional teachers. 28 thousand additional children and almost 4 thousand mothers would survive.

Interpretation

If the debt service of these governments was reduced, millions of additional people and children would have access to economic and social human rights. This analysis demonstrates that debt service should be considered a human rights issue and that it acts via multiple channels including revenue, representation, redistribution, and regulation.