Debt Cancellation and Covid-19
This weekend, 18 and 19 July, the G20 Finance Ministers are meeting and Debt is on the agenda. The outcome could be a make or break moment for countries in the Global South tackling the Coronavirus. The G20 must be encouraged to cancel the debt owed by some of the poorest countries in our world in order to save lives during this unprecedented global pandemic and economic crisis.
Cancelling debt payments is the fastest way to free up existing public resources to tackle this devastating crisis.
In 2020, the group of 76 poorest countries are due to spend:
- $18.1bn on bilateral debt payments to other governments
- $12.4bn to multilateral institutions such as the IMF and the World Bank
- $10.1bn to external private creditors such as banks and hedge funds
That’s $40 billion due to be spent on debt repayments in 2020 alone: money that could instead be easily and instantly diverted to healthcare.
A briefing note from the Jubilee Debt Campaign explaining Covid-19 and the debt crisis is attached here.
The Call for Debt Cancellation: #CancelTheDebt
The call for debt cancellation has been one of the strongest messages coming from the Global South in response to the Covid-19 crisis.
64 countries, including 32 in Africa are spending more on debt relief than they are on public health. The World Bank estimates that Africa will enter its first recession in 25 years, costing $79 billion in lost output due to Covid-19. 500 million people could be pushed into poverty because of Covid-19. Debt cancellation is needed in the coming years to enable countries to pay for the crisis and rebuild their economies.
When the crisis hit, African Finance Ministers issued a joint statement calling for action to be taken, the African Union called for a moratorium of at least four years.
In April, Sisters of Our Lady of Apostles (Irish Province) joined over 250 other civil society organisations in calling for debt cancellation to help countries in the global south respond to the Covid-19 pandemic. Due to pressure from civil society and a huge public outcry, the G20 committed to suspending up to $12 billion worth of debt service. This is excellent, but doesn’t go nearly far enough as it is just a postponement: permanent debt payments cancellation is needed!
Good… But More Is Needed!
Private lenders, have so far refused to take part in any debt cancellation and are due to be paid $10 billion this year alone. The World Bank and other multilateral development banks have also refused to provide debt cancellation. Many countries who need debt cancellation in the face of Covid-19 were also not included. The Covid-19 crisis could mean 500 million more people are pushed into poverty. World leaders must cancel debts now to enable countries to cope with the crisis and rebuild their economies.
The OLA Sisters support the call by Jubilee Debt Campaign for world leaders to agree to:
- The cancellation of debt payments to bilateral lenders and the IMF and World Bank for up to four years, and at least until a debt workout process exists. The latter could be paid for by a combination of funds from a Special Drawing Rights issuance, gold sales, use of reserves, and donor grants.
- The cancellation of debt payments to private lenders rather than those lenders be bailed out by IMF loans.
- The introduction of legislation in the UK and New York jurisdictions to prevent a lender suing a government for following the G20 Debt Service Suspension Initiative and suspending debt payment.
- Ensuring unmanageable debt is brought to sustainable levels over the long term through a fair and transparent process for restructuring and further debt stock cancellation, such as a global debt workout mechanism, and the promotion of binding rules on responsible lending to prevent future crises.
- All countries that need it in the context of the current crisis should receive debt relief, not just those included in the DSSI initiative. This should be decided through an independent and transparent process, that considers not only capacity for payment but also takes development needs, human rights, gender equality and climate vulnerabilities into account, as well as issues of debt illegitimacy.
What Can We Do?
The G20 Finance Ministers are meeting this weekend, 18and19 July, to decide how to respond to the crisis, it is crucial they hear the message that more debt cancellation is needed. It is essential to build public pressure ahead of this G20 Finance Ministers meeting to show the need for debt cancellation.
Remember the G20 is not just an economic group, they are a political grouping who are responsive to public pressure! We know that one voice can feel like a drop in an ocean, but the ocean is made up of many drops. So please add your voice to the call, and encourage others to do the same!
Please share these global petitions calling for debt relief via Facebook, Whatsapp, Twitter, email and other forms of social media now. These petitions are global and can be shared in any country: already almost 800,000 people have signed.
Day of Action on Social Media: 17 July
Please take action on social media and tweet at your Finance Minister just ahead of the G20 meeting. This will help make a global noise just ahead of the G20 Finance Ministers meeting. In the European Union we call on Commissioners Valdis Dombrovskis and Paolo Gentiloni, ECB Governor Christine Lagarde, and Eurogoup President Paschal Donohoe to positively influence the G20:
G20 Finance Ministers are meeting this weekend to discuss #Covid19. 64 countries spend more on debt than healthcare. I’m calling on @VDombrovskis @PaoloGentiloni @Lagarde @paschald to #CancelTheDebt #dropdebtsavelives #G20
Use hashtags: #CancelTheDebt #dropdebtsavelives #JustRecovery #G20
Sign the International Statement calling for Debt Cancellation
Over 270 organisations signed a statement in April calling for debt cancellation. If you have not signed yet and would like to please follow this link for more information: