The General Assembly of the United Nations (UN) approved today with 136 positive votes, 41 abstentions and 6 against the resolution that limits the actions of vulture funds through a series of nine principles that provide a framework for a comprehensive legal system for the processes of sovereign debt restructurings.
the decision was taken by simple majority vote after a discussion that lasted for six months and was initially driven by Argentina and the G77 plus China.
once known the positive result exposed on two large screens located on the sides the central podium of the General Assembly began widespread applause and greetings of officials who came to congratulate the Argentina delegation, headed by Foreign Minister Hector Timerman and Economy Minister Axel . Kicillof
also present at the great hall of the UN, the US ambassador Cecilia Nahon ; and the representative to the multilateral organization María Perceval .
before taking forward the vote required a simple majority, the ambassador of South Africa, Kingsley Mamabolo, current president of the Group 77 and China, introduced the draft resolution and congratulated his Bolivian counterpart, Sacha Llorenti, for his "leadership and management" in front of the Special Committee that drafted the document and the office of UNCTAD.
the basic principles on restructuring debt, "added a base and a result for future discussions to this issue," said Mamabolo few minutes before the countries materialize the vote.
nine principles contained in the resolution are sovereignty, good faith, transparency, fairness, equal treatment, sovereign immunity, legitimacy, sustainability and restructuring of the majority.
"debt today generates violence, inequality, creates a situation in which powerful take advantage and make big profits on the least developed countries, "said the chancellor after the vote.
the nine points containing Resolution
1. A sovereign state has the right, in the exercise of its discretion, to develop their macroeconomic policies, including the restructuring of its sovereign debt, a right that must not be frustrated or hindered by abusive measures. The restructuring should be done as a last resort since the beginning preserving the rights of creditors.
2. The principle that the sovereign debtor and all creditors must act in good faith implies their participation in constructive negotiations restructuring of sovereign debt and other process steps in order to restore debt sustainability and debt service rapid and lasting way and to get the support of a critical mass of creditors through constructive dialogue about the conditions of restructuring.
3. The principle of transparency should be promoted to increase the accountability of stakeholders, what can be achieved timely sharing both data and related sovereign debt renegotiation process.
4. The principle of fairness requires that all institutions and actors involved in restructuring sovereign debt, including at regional level, in accordance with their respective mandates, are independent and refrain from exerting undue influence on the process and other interested or acts that create conflicts of interest or corruption or both.
5. The principle of equal treatment imposes on States the obligation to refrain from arbitrarily discriminating against creditors, unless the difference in treatment is justified according to law, be reasonable and correspond to the characteristics of credit, guarantees equality among creditors and consideration by all creditors. Creditors are entitled to receive the same treatment in proportion to their credit and the characteristics of this. No creditor or group of creditors should be excluded a priori from the restructuring of sovereign debt.
6. The principle of sovereign immunity from jurisdiction and execution of restructuring of sovereign debt is a right of States to foreign domestic courts, and exceptions should be interpreted restrictively.
7. The principle of legitimacy implies that by establishing institutions and perform tasks related to sovereign debt restructuring operations must be respected at all levels, including requirements and the rule of law. The terms and conditions of the original contracts remain valid until they are changed by a restructuring agreement.
8. The principle of sustainability means that restructuring of sovereign debt must be made in a timely and efficient manner and create a situation of stable debt in the debtor State, preserving from the beginning the rights of creditors and simultaneously promoting sustained economic growth and inclusive and sustainable development, minimizing economic and social costs, ensuring the stability of the international financial system and respecting human rights.
9. The majority restructuring involves restructuring agreements sovereign debt to be approved by a qualified majority of creditors of a State will not be affected, harmed or hindered otherwise by other States or by an unrepresentative minority of creditors, they must respect the decisions taken by the majority of creditors. States should be encouraged to include CACs in their sovereign debt issues.