The Common Leveraging Union of Borrowers (CLUB)
The CLUB is a union of sovereign debtors established to pool capacities and resources of Member States, supported by the OSC secretariat to reduce external debt burdens and secure more favourable fresh financing; conducive to transformative, sustainable, and multidimensional development through borrower- coordination and collective negotiations with creditors.
CLUB
Concept
The Common Leveraging Union of Borrowers (CLUB) agenda aims to transform the international financial architecture towards equity, solidarity and sustainability by reducing debt burdens.
Objectives
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Reduce debt burdens.
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Address the imbalances in the relations and levels of development between the North and South.
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Achieve authentic development through strategic investments in sovereign- enhancing sectors.
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Increase access to highly concessional finance, with little to no conditionality, for our multidimensional and strategic agenda for a Third Way of Development.
DIFFERENCE — For New Financing
| Issue | Multilateral Development Banks | The CLUB |
|---|---|---|
| Collateral | Economy, exports, PPAs, etc. | Trust between borrowers; common interest in success; solidarity and resilience fund |
| Project allocation decisions | Often creditor-driven, conditional | Peer (borrower) - driven |
| Risk assessment | Country-by-country basis, governance assessment, conservative debt thresholds | Trustee rating; solidarity and resilience fund; peer (borrower) learning and capacity building |
| Lending terms | Differentiated by income level of borrowers (sovereign) and/or credit rating of borrower (non-sovereign) | Uniform |
| Ownership/ shareholding | Creditors are majority shareholders | Creditors get repaid, OSC members own the CLUB |
| Results | Lengthy individual project evaluation by creditors and borrowers | OSC members do individual project evaluation, creditors get understanding of collective results and returns |
DIFFERENCE — For Debt Relief?
| Issue | G20 (G21) Common Framework | The CLUB |
|---|---|---|
| Negotiation approach | One-by-one for each borrower | One-by-one approach to each creditor/type of creditor |
| Final decision-making | Creditors only – low bargaining power for borrower | Borrowers (OSC Ministers of Finance) decide with creditor – all can take or leave |
| Burden sharing principle | Creditor perspective only clarified – “comparability of treatment” | Aim for fair burden sharing between creditors and debtors |
| Relief terms | Unclear, negotiated one-by-one for each borrower, “preferred creditors” always excluded | Can be based on uniform principles and/or borrower-determined terms vis-à-vis each creditor (and type of lending from that creditor) |
| Timeline | Creditor determined, possible for holdouts | Borrower and creditor determined |
| Policy/reform conditions | Often extensive, IMF program determined | Minimised (if any) due to uniformity |
Functionality and Delivery
The CLUB is for All countries of the greater South and all other international organisations and initiatives – both inter- and non-governmental are invited to seek membership of the CLUB.
The Ministerial Committee of Finance will meet regularly to assess developments in the international financial system, determine the direction and course of their efforts, and interact with the Secretary-General for the implementation of decisions taken.
CLUB IS FEASIBLE, enhances borrower agency and solidarity across OSC Member States
ALL DECISIONS MUST BE TAKEN by governing committee = OSC Ministers of Finance
ASK TO CREDITORS IS TO INVEST into a new instrument with lower “pooled” risk and significant returns
ENABLES INTRODUCTION of reasonable new principles on debt relief – urgent as existing frameworks are not delivering
The CLUB will benefit Member States, and contribute to the overall well-being of humanity, fostering opportunities through South-South cooperation, Southern integration, and reducing migratory pressure on the youth in the Global South in the medium to long term.
