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Public debt and human rights: a necessary paradigm shift for Latin America

By Francisco Cantamutto, Fiscal Justice and Sovereign Debt Advisor

The recent Resolution 2/26 of the Inter-American Commission on Human Rights (IACHR) on Fiscal Policies and Human Rights in the Americas is a normative milestone that deserves to be celebrated and widely disseminated. For the first time, a body of the inter-American system clearly and comprehensively sets out the links between fiscal policy decisions—including public borrowing, debt sustainability and the conditionalities associated with financing processes—and States’ human rights obligations.

The document, far from being a mere declaration of abstract principles, offers concrete and operational criteria for assessing whether a debt policy is compatible with the rights commitments that countries have assumed. Ultimately, it proposes tools for evaluating the impacts of debt in broad terms, and by considering longer timeframes, this perspective allows for the incorporation of development objectives that are often compromised by short-term fiscal approaches.

Section 4 of the Resolution (“Public Debt, Fiscal Sustainability and Human Rights”) specifically addresses this issue. This article seeks to highlight the value of this contribution by the IACHR to the management of public debt in a manner aligned with the guarantee of human rights.

An essential shift in the narrative

For decades, the debate on public debt in Latin America has been dominated almost exclusively by the language of macroeconomics: debt-to-Gross Domestic Product (GDP) ratios, fiscal sustainability, risk ratings, and differences in the interest rates paid. Although technically necessary, this vocabulary has tended to obscure a central dimension: decisions about how debt is contracted, managed and repaid have direct and measurable consequences for people’s lives, particularly for those in situations of greater vulnerability.

Resolution 2/26 brings this central dimension to the fore. By establishing that States must assess debt sustainability “in a manner compatible with human rights and not exclusively on the basis of macroeconomic indicators” (IACHR, p. 23), the IACHR proposes a genuine broadening of the analytical framework. It is no longer enough to ask whether a country can repay its debt according to traditional sustainability models, centred on the relationship between GDP growth, the fiscal deficit and the interest rate (such as the model proposed by Blanchard, which underpins IMF analysis); it is also necessary to ask whether such repayment compromises the State’s capacity to finance health, education, social protection and other essential services related to human rights; whether it exacerbates structural inequalities; whether it shifts unfair burdens onto future generations; or whether it produces regressive and discriminatory effects (sections 3.7, 4.2 and 4.6 of Resolution 2/26).

This shift in narrative is significant. Reframing debt as a human rights issue transforms the kinds of questions asked by governments, multilateral institutions, creditors and citizens. The debate moves from one centred on what is fiscally viable to one that asks what is compatible with human dignity and with the international obligations undertaken by the State.

The situation in Latin America: a region under pressure

The resolution comes at a critical moment for the region. Available ECLAC data show a picture of high and persistent indebtedness: central government gross public debt as a percentage of GDP has remained above 51% in Latin America for six years, a level not seen since the beginning of the twenty-first century and one that has failed to return to pre-pandemic levels. Public debt is estimated to have reached an average of 69.4% of GDP in 2024, with six economies in the region above 60% and two of the largest—Argentina and Brazil—at around 78%. The situation is even more critical in the Caribbean, where the average over the past six years has been around 75%, with ten countries carrying debt above 60% of GDP and three of them at or above approximately 100%.

This high-debt scenario is combined with low growth and restrictive financial conditions (owing to relatively high interest rates and risk premiums in the region), which has steadily increased the burden of debt interest. After three consecutive years of increases, interest payments reached a historic level of 3.0% of GDP on average for countries in the region in 2024. This is where the human rights dimension becomes unavoidable: according to ECLAC data, in 2023 these interest payments were equivalent to 70% of public investment in education, 86% of investment in health and 57% of investment in social protection. In other words, the burden of indebtedness translates into a contraction of the fiscal space available for investment linked to guaranteeing human rights.

These are not macroeconomic abstractions, but a tangible reality highlighted by the IACHR resolution, which notes that unsustainable public debt and an excessive debt-service burden “may jeopardize the continuity of public policies, the provision of essential services and States’ capacity to guarantee human rights, with disproportionate impacts on persons and groups in situations of vulnerability” (IACHR, p. 11). When debt service competes with health or social protection budgets, the question of debt sustainability ceases to be only a question for financial markets and becomes a question about effective access to rights. The resolution emphasizes the importance of mobilizing the maximum available resources (section 1.8) and of expanding and justifying fiscal space in order to analyse these impacts (section 1.9): is it justifiable to prioritize debt repayment over people’s rights to education, health and social protection?

There is an additional factor that the region cannot ignore: its growing exposure to climate shocks. Several countries have begun to incorporate innovative clauses into their debt issuances linked to the occurrence of disasters. Grenada (in relation to bonds) and Saint Vincent and the Grenadines (in payments to the World Bank) activated such clauses in 2024, while at the same time showing slight increases in their debt-to-GDP ratios. This illustrates how climate and fiscal vulnerability reinforce one another: economies under pressure from debt are unable to respond to the emergency with due diligence or make the investments required to address it. The IACHR resolution identifies this problem and places particular emphasis on duties of cooperation for the fulfilment of human rights in the region: creditors cannot demand that payments be maintained in critical situations (section 2.6). The burden of measures adopted must not compromise the State’s capacity to finance essential policies, programmes and public services, and must avoid exacerbating structural inequalities (section 4.2 of Resolution 2/26).

This is precisely why it is so valuable that the resolution devotes a specific section to financing care systems, requiring “adequate, stable and progressive” budget allocations and warning of the effects that cuts to primary care, early childhood education and community programmes have in increasing the burden of unpaid work, especially on women and girls (section 3.8 of Resolution 2/26). In a context where fiscal space is, in practice, heavily constrained by interest payments, these warnings serve as a concrete alarm signal: without a change of approach, it is precisely these areas—care, health and social protection—that tend to absorb the cost of adjustment, with impacts that deepen existing inequalities, particularly gender inequalities.

Concrete principles for assessing debt

Beyond its symbolic value, the resolution provides practical tools for a scenario such as the one described above. It establishes that regressive fiscal measures—including austerity measures—may be adopted only exceptionally, when they are duly justified, temporary, necessary, reasonable, proportionate and non-discriminatory; respect the minimum essential content of rights; have been assessed ex ante and ex post; and where no less harmful alternatives exist (sections 3.7 and 3.10 of Resolution 2/26). With debt levels exceeding 50% of GDP across much of the region and interest burdens directly competing with spending on health and education, this standard provides a clear test against which any fiscal adjustment package can be assessed.

The resolution is also categorical regarding conditionalities associated with financing and restructuring agreements: while recognizing that such agreements can be legitimate tools, it warns that States should refrain from accepting conditionalities that are incompatible with human rights, particularly those requiring reductions in essential social spending, regressive labour reforms or tax reforms with regressive effects (sections 1.9, 4.3 and 4.5 of Resolution 2/26). This point is central to the Latin American debate, where numerous adjustment programmes associated with international financial institutions have included precisely these kinds of conditionalities, in a context where, as the data show, fiscal room for manoeuvre is already extremely limited.

The resolution also focuses on something frequently missing from public debate: the responsibility of both creditor States and of States in their capacity as members of international financial institutions. By stating that they too must refrain from promoting or supporting decisions that restrict the fiscal space of other States, or require regressive measures be implemented in such States, the IACHR introduces a dimension of shared responsibility that transcends national borders and points towards an international financial architecture more consistent with human rights (section 4.4 of Resolution 2/26). This aspect is particularly relevant when considering, for example, the role of the IMF in the region, given that it currently has agreements in place with seven countries (Argentina, Barbados, Costa Rica, Ecuador, Honduras, Jamaica and Suriname), which it reviews periodically. The IMF has consistently sought to avoid bringing its practices into conformity with international human rights law.

Looking ahead: from recognition to implementation

The real challenge, of course, will be implementation. The resolution requires human rights impact assessments for borrowing and economic reform decisions (sections 3.10 and 4.7), as well as effective accountability mechanisms, access to fiscal information and judicial avenues for challenging decisions that affect rights (sections 1.12 and 1.13). If taken seriously, these requirements could profoundly transform the way debt policies are designed, negotiated and implemented in a region where fiscal room for manoeuvre is becoming increasingly constrained.   

For civil society, human rights organizations and Latin American social movements, this resolution provides an essential normative foothold: a framework backed by a body of the inter-American system that makes it possible to argue, on legal and not merely political grounds, that decisions on public debt are not neutral from a human rights perspective, and that international standards exist against which those decisions can and should be assessed.

Ultimately, Resolution 2/26 does not by itself resolve the debt crisis affecting the region, but it does offer something equally important: a language and conceptual framework for discussing it differently. An approach in which the central question is no longer just how much a country can afford to pay, but what paying it costs its people and future generations—measured, quite literally, in schools, hospitals and social protection programmes—and whether that cost is compatible with the rights that States have committed to guarantee.