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Coronavirus: Cancel Global South Debts!

7 Apr 2020

We're calling for debt cancellation of Global South countries to be cancelled.

Read the full statement, signed by 100s of groups around the globe, here.  

If your organisation wishes to sign the statement, email maeve at financialjustice dot ie 

PRESS RELEASE

  • Developing country debt must be cancelled to tackle coronavirus crisis
  • Emergency finance must not add to debt burdens
  • Process to reduce debts to sustainable level in future also needed

On World Health Day, amid an unprecedented global crisis, Financial Justice Ireland joins more than 100 organisations who are calling for developing country debt to be cancelled to fight the Covid-19 health and economic crisis. [For full list of Irish signatories, see note to Editor] 

Cancelling all debt payments owed by low-income countries to other governments, multilateral institutions and private lenders would free up to US$ 25.5 billion to fight coronavirus in 2020 alone. Extending the cancellation to apply to payments due in 2021 would make another US$ 24.9 billion available to help save lives now and in the future.

The IMF and the World Bank have called for debt payments by the poorest countries to other governments to be suspended, but with the effects of the pandemic likely to last for years, delaying rather than cancelling payments won’t solve the problem. 

 Cancellation also needs to apply to all creditors, including bilateral, multilateral and private lenders, to ensure freed-up money goes to support the pandemic response, and not to pay off other debts.

Maeve Bateman, Director of Financial Justice Ireland, said:

Millions of people in some of the world’s poorest countries are facing devastating health, social and economic crises as a result of the Covid-19 pandemic. Permanently cancelling upcoming debt payments owed by these countries would be the fastest way to free up existing public resources to tackle this unprecedented crisis and to save lives.

“The suspension on debt payments called for by the IMF and World Bank will fall short of this goal if it doesn’t apply to all lenders, and only postpones payments."

Sorley McCaughey, Head of Policy with Christian Aid Ireland [who have also signed the statement], added

"Full cancellation of all external debt payments is critical, along with emergency finance that doesn’t add to debt burdens. This must be followed up with a more comprehensive and long-term approach to debt crisis resolution.”

As well as a cancellation of debt service, up to an additional US$ 73.1 billion of emergency finance will be needed to help low income economies as they respond to the crisis in 2020. This must be provided through grants, rather than loans, to stop recipient countries getting even deeper into debt. Addressing the long-term debt pressures on developing countries also requires decision-makers finally agreeing reforms to the international system for dealing with sovereign debt restructuring, once the acute Covid-19 crisis has passed. 

A joint letter– signed by Financial Justice Ireland - will be sent to governments and their representatives at the IMF and World Bank today. It calls for:

• The permanent cancellation of all external debt payments due in 2020 by developing countries, with no accrual of interest and charges and no penalties. 

• The provision of additional, fresh emergency finance that does not create more debt.

• Debt cancellation and new financing to be provided free of demands for market-friendly and austerity-focused policy reforms in developing countries.

• Measures to be put in place to protect developing countries from lawsuits when ceasing 2020 debt payments.

• A process under UN auspices to be agreed in the longer term, to support systematic, timely, and fair restructuring of sovereign debt.

ENDS

  • Irish signatories of the statement include Financial Justice Ireland, Christian Aid Ireland, Trócaire, Action Aid Ireland, Friends of the Earth Ireland, Comhlámh, Centre for Global Education, Societies for African Missions Cork, Jesuit Centre for Faith and Justice, and the Missionary Society of St Columban
  • International signatories of the statement include the African Forum and Network on Debt and Development (Afrodad), Asian Peoples’ Movement on Debt and Development (APMDD), Latin American Network on Debt, Development and Rights (Latindadd) and European Network on Debt and Development (Eurodad). Other signatories include Jubilee Debt Campaign UK, USA and Germany, Oxfam, ActionAid, International, The ONE Campaign, Cafod, Save the Children and Global Justice Now, as well as the Mozambique Budget Monitoring Forum, Budget Advocacy Network in Sierra Leone and CUTS International, Zambia.
  • African finance ministers have called for a suspension of all interest payments in 2020, and all principal and interest payments by fragile states. Urgent calls for debt relief have also been made by the United Nations Secretary General, the United Nations Conference for Trade and Development, the Prime Ministers of both Pakistan and Ethiopia, the Ecuadorian Congress and Vatican Cardinal Luis Antonio Tagle.

 Full statement available here