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Debt Relief, Debt Crisis Prevention and Human Rights: The Role of Credit Rating Agencies

Source: United Nations
Author: Yuefen Li
Year: 2021

In the present report, the Independent Expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights, Yuefen Li, examines the inherent structural problems of credit rating agencies and their failure to perform well their role of assessing risk and addressing the information asymmetry for bridging investors and debtors, thus having a negative impact on debt crisis prevention and resolution. In the present report, she sheds light on how credit rating - related announcements, especially downgrades, can lead to enormous impacts on the ability and capacity of States to respect, protect and fulfil their human rights obligations. The Independent Expert refers to human rights norms and standards applicable to sovereign debt and credit ratings and to the responsibilities of credit rating agencies as important actors in the international debt architecture. A set of recommendations, including in relation to the much-needed accountability and reform of these institutions, is made at the end of the report.

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