Debt Audit

A debt audit is a review of debt or loans, and both the Norwegian and the international debt relief movement have been advocating for the use of debt audits to uncover odious debt.

In 2013, Norway was the first creditor country to complete a debt audit of loans given to developing countries. The Norwegian debt audit reviewed the loans in light of UNs principles for responsible lending and borrowing. While the debt audit found that Norway had followed its own rules at the time when the loans were given, the audit also concluded that Norway’s lending practice was not in compliance with the UN principles. Debt Justice Norway published our own shadow report where we interpreted the UN principles and applied these on a sample of countries. We concluded that parts of the debt of Indonesia to Norway should be cancelled.

In 2007, Ecuador was the first country to launch a government initiated debt audit. The audit showed that many of the loans should never have been granted or was without legal anchoring, and recommended the president of Ecuador to refuse to repay almost 40 per cent of Ecuador’s foreign debt. Over the last years, governments, parliaments and civil society groups in several debtor countries have completed debt audits. The objective of the audits has been to determine the original conditions for the loans, how much interests has been paid, what the money from the loans have been used on, who loaned the money and in which name, as well as the role and identity of the lenders. The last country to initiate a debt audit was the Philippines, where Congress in December 2016 decided to initiate a debt audit in order to review the legitimacy of loans the country had received in order to finance several development projects.

The UN Special Rapporteur on Debt and Human Rights has emphasized how important debt audits are both in order to review the legitimacy of the debt and to examine how debt repayment affect the fulfillment of human rights.