Over 100 organisations from around the world have called for immediate cancellation of debt payments by developing countries in response to the Covid-19 health and economic crises. The statement, which is being sent to the G20 governments, IMF and World Bank, calls for a range of measures to cancel debt payments in 2020 and create a process to reduce debt burdens to sustainable levels through overall debt cancellation in coming years.
The IMF and World Bank have called for a suspension of debt payments by the poorest countries to other governments, though these payments would still need to be made in coming years. African Finance Ministers have called for a suspension of all interest payments in 2020, and all principal and interest payments by fragile states.
Sarah-Jayne Clifton, Director of Jubilee Debt Campaign, said:
“Developing countries are being hit by an unprecedented economic shock, and at the same time face an urgent health emergency. The suspension on debt payments called for by the IMF and World Bank saves money now, but kicks the can down the road and avoids actually dealing with the problem of spiraling debts.
“Instead, debt payments need to be cancelled with immediate effect, including payments to private creditors. This is the fastest way to keep money in countries to use in responding to Covid-19, and to ensure public money is not wasted bailing out the profits of rich private speculators. At the same time, we must set in motion a process to tackle overall debt levels once the immediate crisis is over, by cancelling and restructuring debts to bring them back down to a sustainable level.”
Signatories of the statement alongside Jubilee Debt Campaign include the international networks 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 Oxfam, ActionAid International, The ONE Campaign, Cafod, Save the Children, Tearfund and Global Justice Now, as well as the Mozambique Budget Monitoring Forum, Budget Advocacy Network in Sierra Leone and CUTS International, Zambia.
Calculations by Eurodad based on IMF and World Bank figures for 69 of the poorest countries for which there is data showing that they are due in 2020 to pay $19.5 billion to other governments and multilateral institutions and $6 billion to external private lenders.
The statement calls for:
• Multilateral institutions, including the IMF and World Bank, and lending governments, to offer an immediate cancellation of all debt payments for the remainder of 2020 for all countries in need, and most urgently for the poorest countries.
• The IMF and World Bank to urge any country ceasing multilateral and/or bilateral debt payments to also cancel payments to private external lenders.
• The G20 to support moves by any country to stop making payments on debt to private external lenders.
• Key jurisdictions, especially the UK and New York, to pass legislation to prevent any lender suing a government for stopping debt payments in 2020. Almost all international debt contracts are owed under UK or New York law.
• Debt payment cancellations and additional finance to be free of economic policy conditionality promoting privatisation, deregulation and trade liberalisation.
• The creation through the United Nations of a systematic, comprehensive and enforceable process for sovereign debt restructurings.
• The IMF to introduce clear guidelines on when a debt is unsustainable, and follow its policy only to lend to countries with unsustainable debts if there is a default or debt restructuring.