Jubilee Scotland has signed up today to a new debt jubilee to tackle the Covid-19 health and economic crisis facing hundreds of millions of people. This World Health Day, more than 150 organisations and networks have called for debt in the global south to be cancelled to fight to COVID-19 outbreak.
Some of the world’s poorest countries are facing health and economic crisis unlike what we have seen here. By cancelling the upcoming debt payments owed by these countries, it would be the best way to free up existing public revenue to support their people and not be burdened with debt that rises unsustainably over the next few years of recovery.
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.
Anne Funnemark Campaign director of Jubilee Scotland, 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. 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 Jubilee Scotland – 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.