Understanding Legal Foundations and Terms of Public Debt for Investigative Reporting
Explore the historical injustices, odious nature, and illicit financial flows associated with public debt, delving into the socio-political and legal foundations impacting debt management. Uncover how debt is driven by profit motives, shaped by contract law, and necessitates critical reflection when reporting. Discover the initial stages and key considerations when investigating debt agreements and monitoring debt sustainability.
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Presentation Transcript
L E G A L F O U N DA T I O N S A N D T E R M S O F P U B L I C D E B T A J O U R N A L I S T S T O O L K I T F O R I N V E S T I G A T I V E R E P O R T I N G D R . L Y L A L A T I F W W W . L A I - L A T I F . C O M X : @ L Y L A A L A T I F
HISTORICAL INJUSTICE, ODIOUS NATURE, ILLICIT FINANCIAL FLOWS Colonialism Debt as a response to funding colonial administration expenses Foundation for Odious Debts Imperative to pay back, Corruption Post Independence Diversification and restricted fiscal space Access to Global Markets Development restricted along the lines of the Washington Consensus, problem of increased capital flight and revenue base erosion Socio Political and Legal Foundations for Public Debt
D E B T P U R E LY B U S I N E S S , C R E AT U R E O F C O N T R AC T L AW Revenue without hedging against risk Redistribution limited to what will generate ROI Representation prioritizing bondholders Profit oriented through interest Binding terms and conditions embedded on hegemonic asymmetries
PURPOSE OF CONTRACT LAW Extractive Vague Open to third party exploitation Costly Disconnected from lived realities Avoids transparency under the guise of nondisclosure and confidentialities Binds through incorporation by reference
REFLECTIVE QUESTIONS When reporting on debt what are the key issues that you focus on? What is your approach?
3 STAGES Initial stage Legal terms and conditions Continuous monitoring
INITIAL STAGES Request the loan agreement Purpose of the loan Investigate the procurement process Assess debt sustainability Transparency in negotiation Public participation Parliamentary approval Debt Management Office Oversight
TERMS AND CONDITIONS IF YOU GET ACCESS TO THE DEBT AGREEMENT WHICH TERMS AND CONDITIONS DO YOU FOCUS ON? WHICH TERMS AND CONDITIONS ARE NECESSARY TO REPORT ON AND INVESTIGATE?
G RO U P W O R K U S I N G T H E D E B T C H E C K L I S T F O R I N V E S T I G AT I V E J O U R N A L I S M
TERMS AND CONDITIONS Amount and interest rates Sale to a third party Repayment plan Assignment and transfer clauses Non disclosure Ancillary documents Collateral Tied or untied loan Lack of detailed default consequences Limitations on rescheduling payment terms Insurance or hedging Force majeure clauses Exchange rate risk Governing law and dispute resolution Fiscal discipline enforcement Sovereign immunity waiver Subrogation rights
CONTINUOUS MONITORING Report on how the loan is being administered, the mechanisms in place for management, and the entities involved. Assess the economic consequences of the loan, including its impact on the budget, taxes, public spending, and future financial obligations. Evaluate if the loan aligns with and supports the nation's social and economic development goals, such as infrastructure, healthcare, or education projects. Scrutinize how the borrowed funds are used. Ensure that spending aligns with what was outlined in the loan agreement through audits and financial reports
HELPFUL SOURCES Africa Africa Debt Monitor https://www.cabri-sbo.org/en/budgets-in-africa/africa-debt- monitor#:~:text=The%20Africa%20Debt%20Monitor%20(ADM,policies%2C%20practices%20and%20institutional%20arrangements. World Bank and IMF Global Debt Database (Private and Public Debt from 1950-2022) https://www.imf.org/external/datamapper/datasets/GDD International Debt Statistics (data on countries external debt stocks and flows for each country) https://www.worldbank.org/en/programs/debt-statistics/ids Debt Service Suspension Initiative (Data on debt service payments for participating countries) https://www.worldbank.org/en/programs/debt-statistics/dssi Quarterly Public Sector Debt https://www.worldbank.org/en/programs/debt-statistics/qpsd/d1-d4 Historical Public Debt Database (as a percentage of GDP) https://www.imf.org/external/datamapper/datasets/DEBT Civil Society Debt Data Portal https://data.debtjustice.org.uk/ Debt Heat Maps Debt Reporting Heat Map https://www.worldbank.org/en/topic/debt/brief/debt-transparency-report Sovereign Debt Stress Heat Map https://sovereignvibe.com/sovereign-debt-stress-heatmaps/ IDA Debt Reporting Heat Map https://www.caa.bj/en/invest-in-benin/partner-reference-publications/world-bank-en/ida-debt-reporting-heatmap/ USAID Debt Transparency Monitor https://www.drglinks.org/resources/debt-transparency-monitor
