UN expert welcomes New York State Legislature debate on Sovereign Debt Stability Bill

GENEVA (25 March 2024) – A UN expert today urged New York State authorities to adopt a bill to step up oversight of how debt from defaulted nations is restructured with creditors.

“The Sovereign Stability Debt Bill creates an opportunity to outline a transparent procedure for States grappling with economic turmoil to restructure their debts effectively,” said Attiya Waris, the UN Independent Expert on foreign debt and human rights.

New York lawmakers hope the Sovereign Stability Debt Bill – if enacted – will help nations in default to embark on quicker economic recovery and prevent holders of sovereign bonds from causing delays to win better terms. Nations in grave economic turmoil are often cut off from international lending markets for years due to delays and setbacks over sovereign bond restructuring.

The process of restructuring sovereign bonds has long been plagued with setbacks, cutting off nations in grave economic turmoil from international markets for years.

Earlier this month, the merger of two similar bills in the New York State Legislature revitalized a proposal that aims to regulate debt claims applicable to eligible debtor States, ensure equitable burden-sharing among all creditors participating in international debt initiatives, and limit the recoveries to private sector creditors at the same level as the United States Federal Government would if it was a creditor.

“The Bill is an important piece of legislation,” Waris said. “The law is premised on recognition of the significant human rights impact of economic crisis and turmoil, including debt distress and disorderly defaults,” the expert said.

The Independent Expert has consistently advocated for cooperation around international debt relief. Last year, through a communication, Waris called on New York State authorities to adopt legislation aimed at supporting international debt relief initiatives for developing countries.

Professor Attiya Waris (Kenya) was appointed the UN Independent Expert on foreign debt and human rights by the Human Rights Council at its 47th session and took up this function on 1 August 2021. She holds a PhD in Law and is a specialist in Fiscal Law, Policy and Development. Ms Waris teaches at the Law School, University of Nairobi, Kenya and has previously taught in South Africa, Rwanda, Malaysia and the United Kingdom. Prof Waris has researched and published on global, African, Asian, European as well as Latin American issues. Learn more, log on to: https://www.ohchr.org/en/special-procedures/ie-foreign-debt

The Special Rapporteurs are part of what is known as the Special Procedures of the Human Rights Council. Special Procedures, the largest body of independent experts in the UN Human Rights system, is the general name of the Council’s independent fact-finding and monitoring mechanisms that address either specific country situations or thematic issues in all parts of the world. Special Procedures’ experts work on a voluntary basis; they are not UN staff and do not receive a salary for their work. They are independent from any government or organization and serve in their individual capacity.