In early 2020, it became clear that many countries in the global South had to choose between paying back debts and using money to respond to the pandemic through investment in medical resources and hygiene kits. On the other hand, highly indebted countries were hit by the worst economic recession in decades.
Pope Francis strongly supported the call for debt cancellation already since last February 2020, stating that “it cannot be expected that the debts which have been contracted should be paid at the price of unbearable sacrifices (…) it is not right to demand or expect payment when the effect would be the imposition of political choices leading to hunger and despair for entire peoples”.
The opportunity to reform the economic system after the 2008 financial crisis was missed. This year, in the midst of the global debate on recovery plans, there are some new chances as the new Biden administration in the United States provides renewed momentum for multilateral action with G20 countries and the IMF on Special Drawing Rights; as well as the UK, which already has a strong record on this issue and is hosting the G7 meeting in June.
Within this context, CIDSE presents a policy briefing calling for debt cancellation and a renewed finance and outlining actions that governments, multilateral institutions and private creditors need to focus on, such as:
1. Cancelling debt payments.
2. Ending beneficial treatment for the private sector.
3. New Finance without conditionality to support global action to tackle COVID-19 and a sustainable recovery.
The briefing was developed by the CIDSE Debt Task Force which consists of the following CIDSE member organisations: CAFOD (England and Wales), CCFD-Terre Solidaire (France), Development and Peace (Canada), Entraide et Fraternité (Belgium), Maryknoll Office for Global Concerns (USA), Misereor (Germany).
Photo: Flick.com/Paul Miller