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UN Committee’s public finance recommendations for post-2015, “too tentative” CSOs say

The UN Intergovernmental Committee of Experts on Sustainable Development Financing (“the Committee”), comprising 30 experts nominated by regional groups, was created by the UN the General Assembly pursuant to one of the agreements in the United Nations Conference on Sustainable Development (Rio+20). The Committee had the mandate to assess financing needs, consider the effectiveness, consistency and synergies of existing instruments and frameworks, and evaluate additional initiatives, with a view to preparing a report proposing options on an effective sustainable development financing strategy to facilitate the mobilization of resources and their effective use in achieving sustainable development objectives.

Last August, the Committee delivered its report (hereinafter “the Report”), which will be an important input into the intergovernmental deliberations that will decide on means of financing the Sustainable Development Goals.

RightingFinance (RF) has just released a human rights audit of the Committee’s report. In this document, members of the Initiative said that the centrality of human rights and equality should not only permeate    the new development goals agreed in 2015, but also the full range of means to finance them.  Thus, their report provides a much-needed guidance on how much the financing proposals on the table so far measure up to human rights commitments, and offer a path forward for improving such alignment in the next phases of the intergovernmental deliberations.

Implementing these parameters, RightingFinance resorted to the principles of international human rights law: maximum available resources, progressive implementation, minimum core, non-discrimination and equality, participation, transparency and accountability, access to justice and to remedy, to evaluate the Committee’s proposals.

Addressing the Committee’s proposals on public finance, RF welcomed the Report’s emphasis on the roles of public finance as increasing equity, providing public goods and services that markets will eschew or underprovide and providing incentives to change behavior of private actors, and managing macroeconomic stability.

But it criticized the Committee as too tentative in its remark that “governments may” prioritize real income gains at the bottom of the income distribution through progressive tax policies. RF recalled that the Special Rapporteur on Human Rights and Extreme Poverty said “the higher the prevalence of regressive taxes in the mix of revenue-raising sources, the more likely it is that a State would run afoul of the principles of equality and non-discrimination and the minimum essential levels of rights enjoyment by the poorest would be threatened.”

Equally tentative it found the Report’s mention that increased international cooperation on tax matters “could” cover “country-based reporting, notification of owners, automatic exchange of tax information, transfer pricing regulations, lists of tax havens and standards for non-economic reporting.”

“It is clear that on such matters, the extraterritorial impacts of tax-related action or omission by states should be forcefully remedied,” RightingFinance said.

The Committee’s report recognized public procurement systems as a suitable tool to promote the development of sustainable local businesses and exhorted authorities to align their procurement policies with national sustainable development strategies. RightingFinance praised this recommendation but considered it is contradictory with the next one, which seems to suggest opening of public procurement systems to market competition.

RightingFinance challenged proposals on environmental finance that it said lack imagination and do little to challenge the model of growth and commodification of the environment that has been responsible for current rates of environmental damage. It, for instance, expressed concern with the Committee’s “premature endorsement of policies on whose environmental friendliness the jury is still out,” such as direct emission restrictions on investments, carbon capture and storage technologies, and payments for ecosystem services. Likewise, it called for balancing the Committee’s support for environmental accounting with a recognition of the risks that it can also facilitate greater use of natural resources as collateral in financial instruments, thus facilitating trends towards the financialization of natural resources.

In a positive step, the Committee recognized the contribution of social protection to equitable growth, and that macroeconomic and fiscal policies that promote full and productive employment, as well as investment in human capital, are central to poverty reduction and increased equity. “We hope this statement will help continue to broaden the set of actors that contest the view that . . . non-economic values are not relevant to [macroeconomic policy’s] design and implementation” RF said.

RF welcomed that the Committee’s Report considered debt financing a viable option to provide funding for public spending on sustainable development, but it found fault with the Committee’s apparent endorsement of how debt sustainability is managed under the World Bank/ IMF Debt Sustainability framework. Indeed, human rights bodies have challenged such framework on the basis that it maintains unduly burdensome rates of debt service that represent an obstacle to the fulfillment of human rights obligations in many countries.

Also addressing public debt issues, and very relevant to the latest developments on human rights and sovereign debt restructuring, the Committee discussed sovereign debt restructuring mechanisms. It referred to the responsibility of the creditors share with the sovereign debtor in preventing and resolving debt crises and the insufficiencies of the contractual approach and the need for alternatives. However, RightingFinance criticized the lack of references to the Guiding Principles on Foreign Debt and Human Rights, which could have “helped cement the urgency of establishing an international debt workout mechanism and also establish some of the parameters that would be needed to make it consistent with international human rights law.”

Other recommendations RightingFinance assessed had to do with national development banks, Official Development Assistance and international public financial institutions. “Human rights commitments . . . should be a central benchmark for assessing whether the financing of sustainable development is sufficient, progressively generated and allocated, and accountable in the lead up to the Third Financing for Development Conference (FfD) in July 2015, the Post-2015 Development Agenda Summit, and in the implementation of their outcomes,” RightingFinance said.

On public finance, though, existing human rights commitments already offer ground for being much bolder than the Committee chose to be.

Read full report by RightingFinance.

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