Social groups urge debt relief for poor countries

Nearly 140 campaign groups and charities urged the IMF and World Bank, G20 governments and private creditors on Tuesday to help the world’s poorest countries through the coronavirus crisis by cancelling debt payments. The call, spearheaded by the British-based Jubilee Debt Campaign, comes a day before a Group of 20 working group tasked with the coronavirus response for developing countries is due to meet. Separately, Ghana Finance Minister Ken Ofori-atta, who chairs the Development Committee advising the World Bank and International Monetary Fund (IMF), singled out China - Africa’s largest bilateral creditor - to do more to relieve its debt burden.

The Jubilee Debt campaign urges the immediate cancellation of 69 poor countries’ debt payments for the rest of the year, including to private creditors, estimating that it would free up over $25 billion for the countries, or $50 billion if extended through 2021.

Major governments and institutions are already pushing for some of the measures the groups are calling for.

The IMF is making $50 billion available from its emergency financing facilities and some 80 countries have already asked for help. The World Bank has also approved a $14 billion COVID-19 response package.

The institutions are also making a joint push for official bilateral creditors to allow low income countries to suspend their debt service payments for 14 months from the start of May.

But Tuesday’s message from the charities and campaign groups echoed the recent concerns of African governments - that it won’t be enough. Ethiopia said in a proposal submitted ahead of the G20 meeting that Africa alone is likely to need $150 billion of support.

When the IMF and World Bank launched their Heavily Indebted Poor Countries (HIPC) debt relief programme in 1996, nations mainly owed money to wealthy countries and multilateral institutions. No longer. China’s government, banks and companies lent some $143 billion to Africa between 2000 and 2017, according to Johns Hopkins University, while African governments have taken on over $55 billion in international commercial debt in the past two years alone

Experts say any effort to provide a debt moratorium or more comprehensive debt relief to developing countries will struggle without China taking on a key role in the process. Yet, Chinese officials have said little publicly about their stance.

The debt campaign group’s statement, whose signatories included the likes of Oxfam and Save the Children, also called for the creation through the United Nations of a systematic and enforceable process for sovereign debt restructurings.