Organizers: Transparency International, Spain
The second resumed seventeenth session of the Implementation Review Group provides a timely opportunity to discuss how UNCAC can be implemented to combat corruption in sovereign borrowing and lending. Member States committed in the outcome document of the Fourth International Conference on Financing for Development (FfD4), to strengthen measures to curb corruption on sovereign debt in a growing recognition of the role that transparency, accountability, and anti-corruption in public lending and borrowing play in supporting sustainable development and sound public finance management.
This side event will convene representatives of Member States, international organisations and civil society to reflect on practical pathways for enhancing anti-corruption safeguards in sovereign debt contracting and management. The discussion will explore opportunities for leveraging the UNCAC to prevent corrupt borrowing and lending practices.
Background
Borrowing is an essential instrument for financing development and responding to economic and social challenges. Yet, resources raised through loans often fail to translate into improved infrastructure and services for citizens. Opacity in debt negotiations, enabled by confidentiality, and coupled with a lack of robust controls and oversight in debt management, facilitates the embezzlement, misuse, and capture of resources. When debt is contracted in secrecy and loan proceeds are diverted or lost, the risk of unsustainable debt rises, leading to fiscal crises.
As debt landscapes become more complex, with a wider range of creditors and financing instruments, strengthening governance around public lending and borrowing is more critical than ever.
In a welcome step, States Parties renewed their commitment to increase transparency and fully implement the UNCAC to curb corrupt borrowing and lending, as reflected in the Fourth Financing for Development Conference’s outcome document – the Compromiso de Sevilla. Specifically, paragraph 48 (h) calls to:
“Strengthen measures to curb corrupt borrowing and lending, including by enhancing domestic legal frameworks as appropriate, including clarifications regarding the authority to borrow, and fully utilizing UNCAC and its Conference of the States Parties to explore options to make such contracts unenforceable”.
By embedding the issues of corruption in the contraction and management of sovereign debt, FfD4 has given new momentum to discuss how the UNCAC can support ongoing international efforts to prevent corrupt debt.
As a legally binding treaty, UNCAC is a powerful instrument to help realise existing soft law principles on responsible sovereign lending and borrowing into concrete legal and institutional measures. Existing provisions under UNCAC could be fully aligned with efforts to prevent and address corruption in the contraction and management of sovereign debt. Such provisions include in the prevention of corruption, Article 9(2 & 3), which calls for appropriate measures to promote transparency and accountability in the management of public finances, and Article 13(b), which calls to guarantee effective public access to information, as well as those on criminalization and law enforcement, especially Article 34 on the consequences of acts of corruption.
Despite this potential, the dynamics and consequences of corrupt lending and borrowing have not yet been explored within the UNCAC or through its Resolutions. Against this backdrop, the side event aims to contribute to an ongoing conversation on how the UNCAC can be fully utilised to prevent and combat corruption in the acquisition and management of sovereign debt, in line with existing commitments such as the FfD4.
OBJECTIVES
The side event aims to:
- Explore how Member States can collaborate within the framework of UNCAC to strengthen commitments that ensure debt is contracted and managed in a transparent, accountable, and corruption-free manner.
- Discuss actionable ways to implement the commitments outlined in the FfD4 outcome document, especially paragraph 48(h) on using UNCAC to curb corrupt lending and borrowing, including through preparatory works towards a Resolution in CoSP12.
Side-event description
The side event will feature a moderated discussion with representatives from governments, international organisations, academia and civil society, followed by an interactive exchange with participants.
Building on discussions that have emerged across financing for development and anti-corruption processes, the session will explore lessons learned, emerging policy developments and opportunities for future cooperation.
The discussion will be guided to remain forward-looking and solution-oriented, with the aim of identifying concrete steps to preventing and combating corruption in debt contraction and management.
