Calls for debt relief for world’s poorest nations

Calls for debt relief for world’s poorest nations
Calls for debt relief for world's poorest nations

These states include the world’s poorest economies, that are struggling with the consequences of coronavirus.

Significant charities such as Oxfam and ActionAid International are requesting for the debt relief, which would free up more than $25bn (#20bn) this past year.

They’ve written to world leaders and important central banks calling for a range of debt relief measures.

The call has been spearheaded by UK-based charity Jubilee Debt Campaign and comes a day before a meeting of the G20 group of the world’s biggest and fastest-growing economies.

Calls for debt relief for world's poorest nations
Calls for debt relief for world’s poorest nations

“Developing countries are being hit by an unprecedented financial shock and at precisely the exact same time confront an urgent health crisis,” said Sarah-Jayne Clifton, director of the Jubilee Debt Campaign.

“The suspension on debt obligations called for by the IMF and World Bank saves money now but kicks the can down the street and avoids actually addressing the issue of spiralling debts.”

The campaigners need debt obligations to be cancelled with immediate effect, such as payments to private lenders.

“This is the quickest way to keep cash in countries to use in responding to Covid-19 and to make sure public money isn’t wasted bailing out the gains of wealthy private speculators,” added Ms Clifton.

Calculations from non-profit network Eurodad show that 69 of the world’s poorest countries are expected to pay $19.5bn to other governments and multilateral institutions, and $6bn to outside private creditors this year.

The International Monetary Fund (IMF) has made $50bn accessible emergency financing, while the World Bank has approved a $14bn response package to the most vulnerable markets. The IMF would like to target the money at countries with weak health systems to help them respond to the outbreak.

Meanwhile, the World Bank’s financing is aimed at both supporting the health and financial effect of the virus. These will consist of cheap loans, grants and technical aid.

Throughout the coronavirus pandemic, campaigners need debt relief to be applied for all nations in need and most desperately for the poorest countries. Looking longer lasting, they need a procedure to reduce debts to a sustainable level following the crisis.

This entails asking the IMF to present clear guidelines on when a debt is unsustainable, and follow its own coverage simply to lend to countries with unsustainable debts when there is a default or debt restructuring plan set up.

In a blog on Monday, the IMF said that the pandemic had pushed the world into a recession. “For 2020 it’s going to be worse than the international financial crisis. The economic damage is mounting across all nations, tracking the sharp increase in new infections and containment measures set up by governments”.

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