Saturday, September 12, 2015

U.N. Nations Approve Principles For Sovereign Debt Restructuring


Fri., September 11, 2015
The United Nations General Assembly on Thursday approved what it described as global "basic principles" for sovereign debt restructuring processes to improve the global financial system, an initiative that was inspired by Argentina's debt crisis, Reuters reported. There were 136 votes in favour, six against and 41 abstentions in the vote on the resolution, which was submitted to the 193-nation General Assembly by South Africa. Unlike the Security Council, which has the power to issue legally binding resolutions, General Assembly resolutions are non-binding. But they carry political weight. The resolution urges debtors and creditors "to act in good faith and with a cooperative spirit to reach a consensual rearrangement" of sovereign debt. "A sovereign state has the right ... to design its macroeconomic policy, including restructuring its sovereign debt, which should not be frustrated or impeded by any abusive measures," it added. The vote came one year and a day after the General Assembly agreed to negotiate and adopt a multilateral legal framework for sovereign debt restructuring processes. It added that states should be immune from domestic court decisions related to sovereign debt restructuring, adding that any exceptions should be limited.

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