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Debt crises: UN expert faults credit rating agencies, urges reform

03 March 2021

GENEVA (3 March 2021) - A UN human rights expert today called for urgent reforms to the international debt architecture, saying the ‘big three’ credit rating agencies had excessive influence over lending decisions, and conditions and interest rates of sovereign debts.

In her first report to the Human Rights Council, the UN Independent Expert on debt and human rights, Yuefen Li, said that “past financial and debt crises, in particular the sub-prime mortgage crisis and the Asian financial crisis, already exposed the inherent structural problems of credit rating agencies”.

“Instead of warning of the coming of a debt crisis, and playing a role in preventing it, they end up exacerbating it,” she said. “The impact of downgrades on developing countries can be enormous”, she added

Li said the so-called big three credit rating agencies - Standard & Poor’s, Moody’s and Fitch Ratings - controlled over 92 percent of the global market, which does not allow fair competition.

“These agencies suffered defects from the start, including conflict of interests, lack of accountability or transparency in their assessments. Often, their grading is procyclical,” Li said.

“Most concerning, their assessments lack human rights considerations, hence exacerbating financial market volatility, reducing fiscal space for investments on health services, vaccines or social protection when it is sorely needed,  and making Government’s efforts to contain debt crisis ineffective.  This increases the suffering of the population.” 

“Reforming the international debt architecture, including the role, criteria, and functioning of credit rating agencies, can no longer be postponed, especially in the face of a deep recession and an imminent debt crisis in 2021 in several developing countries,” she said.

“Issuance of credit ratings should be suspended during a crisis, such as the global COVID-19 pandemic,” she concluded.


The report and informal summaries are available here.

Ms. Yuefen Li is the new 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. She took up her functions in May 2020.
Prior to joining the UN in 1990, Ms. Li was a lecturer at the University of International Business and Economics in Beijing, China. At the UN Conference on Trade and Development (UNCTAD), she assumed various high-level positions and headed UNCTAD’s debt and development finance work. She also managed various projects including on Responsible Sovereign Lending and Borrowing and Globalization. Ms. Li has been guest professor at various universities including Tsinghua University in China. She has published books, papers and articles in professional journals and newspapers, UN publications and documents. She is currently Senior Advisor on South-South Cooperation and Development Finance at the South Centre.

For more information on the work of the mandate, see

Follow the Independent Expert’s work on Twitter: @IEfinanceHRs

The Independent Experts are part of what is known as the Special Procedures of the Human Rights Council. Special Procedures, the largest body of independent experts in the UN Human Rights system, is the general name of the Council’s independent fact-finding and monitoring mechanisms that address either specific country situations or thematic issues in all parts of the world. Special Procedures experts work on a voluntary basis; they are not UN staff and do not receive a salary for their work. They are independent from any government or organisation and serve in their individual capacity.

For more information and media requests, please contact Ms Juana Sotomayor, Human Rights Officer (+41 22 928 9814/[email protected])

For media enquiries regarding other UN independent experts, please contact: Renato de Souza (+41 22 928 9855 / [email protected])

Follow news related to the UN’s independent human rights experts on Twitter @UN_SPExperts.

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