INTRODUCTION

Sovereign financing refers to the financial resources raised by governments to fund public expenditure. It is an essential tool for contemporary governments to finance economic and social policy, as taxation and other forms of domestic resource mobilization are often insufficient to cover all public services and capital expenditure. Sovereign financing also plays a key role in overcoming temporary financial crises and providing relief from unexpected economic shocks and natural disasters. In today's globalized economy, sovereigns can access funds from a variety of sources, such as grants from official and non-governmental donors, export credits, equity investments, sovereign bonds, loans and guarantees from international financial institutions (IFIs), bilateral development finance institutions (DFIs) and private banks and insurers.

The financial obligations undertaken by sovereigns that are not direct monetary transfers, such as official development assistance (ODA) grants, are considered to form part of their sovereign debt liabilities that governments are expected to repay in accordance with the terms of the debt contract. The contracting of such debt by sovereigns can contribute towards and facilitate serious and systematic violations of human rights (Bohoslavsky & Černič 2014; Tan 2013; Wong 2012). Legal and political institutions, such as parliaments and finance ministries, shape sovereign borrowing practices, but sovereign financing also shapes state political institutions and governments’ capacity to respect, protect and fulfil human rights (Bohoslavsky & Černič 2014).

External finance to states can initiate, contribute to or compound human rights violations, both actively and by omission. Poorly contracted and badly managed sovereign finance can lead to unsustainable debt burdens and economic programming that can impact on countries’ ability to meet human rights obligations to their populations (Bantekas & Lumina 2018; Bohoslavsky 2012). Sovereign debt can also be contracted for the purposes of shoring up repressive governments or maintaining authoritarian, corrupt and/or inefficient regimes. Individual projects funded by external financiers, such as IFIs, DFIs or export credit agencies (ECAs), can also lead to human rights violations (Aizawa, dos Santos & Seck 2018; Černič 2014).

This chapter examines the relationship between sovereign financing and human rights, notably the role of official sovereign financiers, in contributing to and/or sustaining the commission or perpetuation of human rights violations in the recipient states of such financing.