PES Manifesto

Europe must embrace responsible lending practices to developing nations

Published Friday, February 8, 2008 at 10:47
by Gail Hurley (1444 views and 0 comments)

The Party of European Socialists is asking citizens what Europe should stand for in the world, and how it can promote democracy, human rights and sustainable development. Many policy-makers in developed countries are currently talking about 'responsible lending' to developing countries. This follows recent rounds of debt cancellation for the poorest countries and fears that these very same countries will quickly re-accumulate unpayable debt all over again.

Many Western creditor countries have also been quick to point the finger at newer lenders, such as China, India, Brazil and Venezuela arguing that these countries are lending irresponsibly to the poorest nations and do not care about human rights or environmental protection in the activities they finance. What should the EU do - and stand for - in such circumstances?

It would be easy for European lenders - both governments and private banks - to initiate a 'race to the bottom' arguing that Europe's financiers need to compete for business in the developing world and therefore cannot adhere to standards on transparency or social and environmental protection. Instead, the EU must seize the opportunity to raise the bar much higher and make the finance it offers of excellent quality. It is in this spirit that the European Network on Debt and Development (EURODAD) has developed its Responsible Lending Charter. The Charter outlines what a responsible, legitimate loan looks like and suggests that all lenders and sovereign borrowers should adhere to this set of internationally agreed responsible financing standards. This is the only way to enforce (and reward) responsible behaviour by lenders and borrowers and thus avoid the re-accumulation of poor country debt all over again.

The EU should set the global 'gold' standard with respect to responsible lending. It has a unique opportunity to be the leader in this critical area.

Find the charter of Eurodad here.

Tags: Africa, aid, development, poverty

File: Responsible_Financing_Charter_report.pdf, Responsible_Financing_Charter.pdf