Transcript Legal frameworks and general principles for indicators in

Legal frameworks and general principles for
indicators in sovereign debt restructuring
Michael Riegner
NYU School of Law/Giessen University
UNCTAD DWM Working Group Meeting
19 March 2014, Buenos Aires
‘…as long as we are unable to put our arguments
into figures, the voice of our science … will never
be heard by practical men. They are, by instinct,
econometricians all of them, in their distrust of
anything not amenable to exact proof.’
Joseph Schumpeter
“The reduction of all qualities to quantities is
nonsense”
Friedrich Nietzsche
Outline
• Indicators in international law
• Lessons learned: Existing legal contexts
• Normative framework: General principles
• Recommendations for DWM design
– namely: Possible wording of GA
resolution/UNCTAD principles
Main points
• Indicators should be used for signalling and guiding
restructuring BUT
– Not in isolation
– Subject to legal framework
• General principles should guide indicator framework
– Derived from existing sources of law
– Sustainability, transparency, ownership, social rights
• Recommendations for indicators in DWM
– Multiple purposes of indicators
– Cascade of sources and authors – namely: GA resolution
– Application subject to impartiality, transparency, review et al.
Indicators in international law
• DWM indicators: Economics – politics – law
• IL contributes to effectiveness, legitimacy,
acceptance of DWM indicators, namely through:
• General principles guiding rules, setting
standards, structuring interplay
• „Global administrative law of information“
Existing frameworks
IMF
EU
Debt Sustainability
Framework/Assessment
Fiscal governance
Surveillance, exceptional
access lending, conditionality
Fiscal discipline, ESM lending,
Commission surveillance
Soft sources, risk-based
indicators, discretion
Hard law (treaty/secondary),
60% to GDP, semi-automatic
enforcement procedure
Performance +/-; flexbility +/-;
(P) impartiality, limited scope
Crisis
Enforceability and (in)flexbility
„Gaming the indicators“
Existing frameworks
• National law
– Subnational debt restructurings
– Central government debt constraints
– Statistical governance, data quality
• Private actors
– Litigation, market conditions
– Coordination by indicators (cf. MDGs)
– Governance by indicators (cf. Doing Business)
Lessons learned
• Potential of indicators
– Evidence-based policy, coordination,
transparency/acceptance, social concerns
• Enabling conditions
– Technical quality, impartiality,
acceptance/legitimacy, enforceability
• Pitfalls
– Obscuring value choices and uncertainty; deceptive
precision; misguiding attention and incentives;
unchecked power
-> Use indicators, but subject to legal framework
General principles
• Sources and methodology
• Sustainability
– Output legitimacy
– Cost efficiency; restructuring to restore sustainability
– Duty to conduct negotiations based on reliable
evidence – qualitative and quantitative
– Availability, impartiality, quality of statistics: capacity,
scientific methods, organizational safeguards, external
review
– Do not use one, but several indicators to avoid
mistakes, gaming etc
General principles
• Transparency
– Input, throughput, output legitimacy
– Indicators to make restructuring more transparent
and reasoned
– Indicators themselves transparent and reasoned
– Disclose data, Access to Information, transparent
process, give reasons for indicators
General principles
• Ownership
– Input legitimacy, self-determination, democracy
– Measure of state control over restructuring
– Ownership over indicators, cf. Paris Declaration
• Legitimate value choices, uncertainty, IPA
– State response and rebuttal of DAS
– Participation?
– Equality?
General Principles
• Human Rights/Social Protection
– Throughput and output legitimacy
– Respect, protect, fulfil, and monitor (CESCR,
OHCHR, indicators)
– Human rights impact assessments
• Monitor and mitigate
• Distinguish inability / unwillingness
• Floor for social spending – size of restructuring/haircuts
– Take into account in negotiations (states, IOs,
private creditors)
– BUT caveats apply
Recommendations: How to use indicators
1. Requirements for restructuring
a) debtor state request
b) IO finding that debt is unsustainable
2. Measure debt sustainability with set of
indicators and reasoned and transparent
qualitative assessment
3. Use to render restructuring negotiations and
dispute settlement more efficient, coordinated
and transparent
4. Use human rights indicators to monitor and
mitigate social and human impact
Recommendations:
Sources and competences
5. Recognize general principles in GA resolution on
a DWM
6.
Cascade of sources and competences
– Define political competence and requirement for
mandate
– Lay down substantive principles
– Define competence and procedure for impartial
application
Recommendations: Application
7. Application by independent expert organ
subject to impartiality safeguards
8. Procedure: mandatory government response,
transparent and reason giving, public
comment
9. Measures on data quality and good statistical
governance
10.Periodic external expert review and political
re-evaluation
Draft proposal
The GA / the Principles on Debt Restructuring
recognize the following principles on debt
assessments and indicators and call upon all
actors involved in restructurings to implement
these principles in their regulations and practice:
Draft proposal
a) Principle of debt sustainability:
Restructurings should be conducted in a costefficient and evidence-based manner that
restores debt sustainability. The evidence base
includes impartial and reliable qualitative
assessments as well as statistical evidence
(including indicators), produced by an
independent institution with the necessary
expertise subject to periodic outside review.
Draft proposal
b) Principle of transparency:
Restructurings should be conducted in a
transparent manner and give reasons for their
outcomes. All relevant assessments, evidence
and indicators should be made public, and
their construction, application and underlying
data should be transparent and explained in
an understandable manner.
Draft proposal
c) Principle of ownership
Self-determination requires a measure of state
ownership over the restrucuring process,
including the political aspects of assessments,
statistical evidence and indicators. This includes
namely underlying value choices, the treatment
of uncertainty and exercises of international
public authority. Such ownership can be satisfied
by an explicit mandate from the political organs
of a competent international organization.
Draft proposal
d) Principle of social protection
All actors involved in a retructuring must
cooperate to monitor and mitigate the human
and social impact of the restructuring. This
entails the production of human rights
statistics and indicators as required by
applicable international law. Resulting
evidence must be taken into account in all
restructuring negotiations and decisions.
Discussion
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Current role of DSAs?
Is HR principle/terminology acceptable?
Can we distinguish technical/political?
Draft proposals?
Global administrative law of information?
Gracias por su atención
Michael Riegner
NYU School of Law / Giessen University
[email protected]