At Jubilee Scotland we have been part of many campaigns calling for debt relief and the cancellation of unjust debt in the global south. Adding to the unjust sovereign debt that many nations need relief for financially, there is another type of debt that needs to be addressed by it’s systemic nature, debt incurred by climate change.  Climate change does not affect people equally. Those individuals, communities and countries affected the most by climate change are also those who have contributed the least to it. Everyday in the global south, there are droughts, natural disasters, food shortages and loss of habitat, as a result of the climate crisis. Many of the affected countries go into debt, because they lack additional finances to respond to these climate disasters.

At the same time, climate change is primarily caused by rich, high-emission countries, including the UK and Scotland. We therefore owe a moral debt to those countries and communities that suffer the most from climate change.  

The 26th Conference of the Parties (COP26) which takes place in Glasgow in November 2021 is set to be the most important UN climate conference for years. COP26 will focus on the immediate need for dramatic climate mitigation targets to be set by Scotland and other world leaders. Additionally, global south countries will be looking for finance initiatives, as more funding is necessary to adapt to the devastating impact of the climate crisis.

In partnership with Oxfam Scotland, Stop Climate Chaos Scotland and SCIAF, we have been researching the ways that the Scottish government can make a meaningful impact at COP26. The Scottish Government has previously committed to putting the voices of people affected by climate change at the heart of the conference. By increasing the Climate Justice Fund and developing a position on loss and damage and championing this issue at COP26, Scotland can show it is serious about its commitment to climate justice and set an example for other global north countries. 

Anne Funnemark, campaign director at Jubilee Scotland and lead author of the report has said: “The climate emergency is, quite literally, costing the earth for developing countries. Ahead of COP26 in Glasgow, rich countries must demonstrate that they will stand shoulder to shoulder with the world’s poorest people by offering more financial support to countries on the frontline of the climate emergency to adapt to climate change while also compensating them for their losses.”

We’re calling on the Scottish Government to :

• Significantly increase the Climate Justice Fund with new and additional finance, such as from a high-emitter tax

• Proactively call for other rich countries, including the UK, to increase their own climate finance informed by a Fair Shares analysis, while championing additionality before and at COP26

• Undertake a review of the Climate Justice Fund to build on its success, ensuring that it is fully aligned with best practice in climate adaptation globally

• Develop a position on loss and damage and use this to champion progress on it at COP26. Namely, a financial mechanism for the WIM and meaningful development of the Santiago Network

Read the report here, or through our viewer below.

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As household debt in the UK has become the highest it’s ever been on record,  many lower income households finds themselves unable to save money at all, increasing these households’ vulnerability in times of financial insecurity.  Households unable to make ends meet have been said by the Office of National Statistics  “to be living beyond their means”. 

Blaming of borrowers often occurs whenever the topic of household debt comes up. The notion that debtedness is the fault of the individual, is often fuelled by soundbites and stories in the media. Society promotes the idea that it is a self-inflicted punishment for something one person has done, because they’re the ones signing up to credit cards, taking out loans, repaying the mortgage. But most household debt isn’t because people are frivolous like many presume. Rather, it is caused by reductions of wages and benefits, redundancy, and illness. According to Stepchange’s Scotland in the Red Report, before COVID-19 the main cause of household debt was  ‘life events’, Life events are classified as unexpected shocks that put a burden on a person’s finances. In many cases, such events are costly burdens that complicate a person’s life, with no room for flexibility. 

With a third of people being affected financially by COVID-19, a wide range of people have experienced a ‘life event’ that has affected them financially.  An estimated 4 million people have been added to the number with substantial household debt since the crisis began. This begs the question of whether or not this will pave the way for people to talk about their debts and how it affects them.

At the same time, The Bank of England stated that £7.4bn of consumer credit was repaid during the first month of lockdown, the biggest net repayment in a month since 1993. A huge reduction in retail spending led to this, with the outstanding debts on credit cards remaining at £64bn. This positive sounding news demonstrates how the lockdown has added to the wealth divide in the UK. People who were able to keep working can see their debts cleared from a lack of incentive to spend, while many workers being hit by job losses and cut wages take on more debt while on furlough. If this trend continues we are unlikely to see a decrease in stigma associated with debt. It’s possible that these figures could be used by creditors to present a distorted version of events when payment holidays end, adding to the guilt of people who are unable to repay when so many others could.

A poll conducted by Citizens Advice Scotland this summer found that 1 in 4 Scottish people were concerned about their debt repayments. In response to these findings a spokesperson for the Scottish Government said that “We recognise the stress and strain debt can create and we would encourage anyone with concerns to contact organisations such as CAS to get advice and support.” While this statement acknowledges the fact that it’s a stressful time for people in debt, it passes the buck of having a conversation about debt back onto the charities that have already done so much to bring the issue to the foreground. Along with voting down the recent plans for rent controls, the Scottish Government hasn’t done much to address people’s heightened debt concerns. 

A reduction of the stigma around household debt is necessary to widen the conversation on the topic and increase the pressure on government and public lenders to make systematic changes to our flawed financial system. To make this happen  we have to harness the shared experience of COVID-19’s impact on household debt. People should not be treated like criminals for the chaotic circumstances that life throws at them. The conversation needs to be facilitated in a way where the Scottish government talks about personal debt, in a transparent way that makes people feel heard instead of at risk for speaking out.  If we don’t talk about the devastating impact of household debt openly and address the scale of the problem, we won’t build back as a better society. 

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We need to assess the public health crisis that is about to explode in the Global South if debt is not outright cancelled. While most Northern countries are in the midst of fighting against the virus, the heaviest impact caused by the pandemic will be on countries in Africa, South & Latin America and Southeast Asia. With many of the Healthcare and social security systems of these countries being ill-equipped to handle the outbreak, the virus will have a devastating effect on the poorest communities. Jubilee Scotland has signed onto a new Debt Jubilee along with 200 other organisations, alling for the cancellation of debt payments paid out from global south countries to the World Bank and IMF during this time. This petition  is one of many calling on the government to take a stance on a pressing issue. It’s estimated by the Jubilee Debt Campaign that over $300 Billion in full debt cancellation is necessary for these countries to fight the virus over the next year. Some payments have been delayed so far, but by merely suspending debt payments, they only defer the problems of these countries for a little while. 

This approach ends up costing creditors nothing, but borrowing countries will have bigger repayments and higher debt risks down the line for many of these countries. Covid-19 has already led to falls in commodity prices and projected increases in borrowing costs in the global south, with limited resources at hand to handle a public health crisis. If these countries have to rely on more outside loans to fight the pandemic they will be stuck in high interest debt traps for decades to come.  One of the biggest risks that these countries are exposed to is the legal challenges that can be brought upon them for failing to keep up their payments. The G20 have called upon private creditors to delay payments, but they are not obliged to. Currently 77 countries are estimated to pay $9.4 Billion from May to December, as part of the G20 deal. Private lenders can sue governments in the UK courts for following the G20’s advice and suspending payments. But the Global South should not be pushed into this by the western institutions who have pledged to help them.

We need your help to call on Chancellor Rishi Sunak, to promote debt relief in these countries that are worst affected by the virus. By signing up to our petition, you help us put across the message that we need real debt cancellation and ways to work out debt in future that doesn’t put human lives at risk. 

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The post A call for a new Debt Jubilee appeared first on Jubilee Scotland.

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.

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