The Jubilee Blog

Pressure Mounts to Address Global Debt Crises as G20 Finance Ministers Meet

Rio de Janeiro Gathering Expected to Advance Development Bank, Tax and Climate Measures

G20 finance ministers begin their third meeting under this year’s G20 Brazilian Presidency. Debt, development bank reforms and tax measures to fund programs to address hunger, poverty and climate change will be center on the agenda.

"The meetings takes place as growing debt crises mean that too many countries are failing to spend on the needs of their people," noted Eric LeCompte who leads the religious development group, Jubilee USA Network. "Developing countries need debt relief, aid and ways to raise more revenue."

A UN report found that 45 developing countries spend more on debt service than on health. In Kenya, violent protests erupted after the government attempted to raise taxes to meet debt payments and continue more than a month later. Addressing impacts of climate change is a focus during G20 meetings as the international community finalizes funding targets during climate negotiations over the next year.

"The G20 is largely responsible for setting the targets and raising the money we need to address climate change and poverty," noted LeCompte who serves on United Nations debt expert groups. "We need better global debt, tax and aid policies to end global poverty and heal our planet."

Multilateral development bank funding and international tax agreements to increase taxes on the extremely wealthy are on the G20 agenda.

Africa Religious Leaders: Debt Forgiveness Key to Region’s Economic Renewal

Interfaith Africa Leaders Call for Changes to Global Economy During Jubilee 2025

Ahead of the Jubilee 2025 year that faith communities are celebrating worldwide, African interfaith leaders called for debt forgiveness and processes to support economic development. Representing Catholic, Anglican, Lutheran and other Christian denominations, Muslims, national councils of churches, interreligious councils across 13 countries in Africa and regional religious organizations, the dignitaries released a statement to the G20, G7, United Nations, IMF and World Bank decisionmakers.

“Our countries … face again agonizing choices between spending and investing on their people and paying their creditors,” said the Africa religious leaders in their statement.“This year alone, Africa will spend $90 billion servicing public debt. Yet, the average African country’s combined spending on health, education and social protection is two-thirds of their debt payments.”

The religious leaders recalled the work of faith communities 25 years ago during the Jubilee 2000 year which led to the largest ever collective debt relief initiative. The Heavily Indebted Poor Countries/Multilateral Debt Relief Initiative (HIPC/MDRI) mobilized more than $130 billion in debt relief in 38 countries.

“Former President Julius Nyerere, of Tanzania, was among the first African political leaders raising their voices to question the need to put debt above the lives of our children,” said Rev. Canon Makunzo Moses Matonya, Secretary General of the Christian Council of Churches in Tanzania. “Unfortunately, we have seen debt rise to levels where we have to face that question again.”

Since 2010, African countries’ interest payments more than doubled, as a percentage of their revenue. At the same time, their combined spending on health, education, social protection and climate amount to two-thirds of debt payments.

“Early in the millennium, debt relief freed the fiscal space for important poverty reduction investments,” said Bishop Matthew Hassan Kukah, of the Catholic Diocese of Sokoto, in Nigeria. “An important focus for us, as then, is that we have good governance safeguards to protect public participation and accountability in the use of those funds.”

Faith leaders in Africa have become increasingly vocal as the continent faces the effects of multiple crises.

“We have allowed a divorce between traditional economic approaches and spiritual values,” said Sheikh Ibrahim Lethome, of the Supreme Council of Kenya Muslims. “As faith leaders, we have a role in guiding our communities so they can make those connections.”

The faith leader statement called for responsible lending and borrowing principles, debt contract clauses that share climate and other risks, and additional sources of finance that do not create debt in order to prevent new high indebtedness cycles.

“While we have moved forward critical debt relief and aid, we still need need improvements in debt relief and aid processes,” said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network, and a co-organizer of the convening of African leaders. “If we had the debt policies and institutions religious leaders called for 25 years ago, we would have tools to help address the climate and poverty crises.”

Read the Africa Religious Leaders' "Heralding a Debt Jubilee in 2025" statement here.

G7 Leaders Pressed to Find Debt Crisis Solutions Amid Worrying Growth Forecasts

Ahead of Jubilee 2025 Year, Pope Francis is First Pope in History to Join G7 Summit

 G7 leaders grapple with debt, climate and development crises in Italy from June 13th - 15th. In addition to the presidents and prime ministers hosted in the southern Italian region of Puglia, others in attendance include Pope Francis, the leaders of Brazil, Argentina, India, other developing countries and heads of the IMF, World Bank and United Nations.

The World Bank forecasts low growth rates, which will not be enough for developing countries to achieve key development goals.

“Over three billion people live in countries that spend more on debt payments than they spend on health and education,” said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. “The pandemic, wars, climate challenges and high interest rates force many countries into hard choices between paying debts and investing in their people.”

In advance of the Jubilee year of 2025, for the first time in history a Pope, Pope Francis, joins the G7 meeting. Last week the Pontiff echoed words of Pope Saint John Paul II in 2000 saying that the Jubilee year is an appropriate occasion to cancel international debt and create new processes to solve debt and development crises.

“The G7 is under a lot of pressure to address growing debt challenges in Africa and among developing countries,” noted LeCompte who was with Pope Francis during his remarks on debt at the Vatican last week. “If we can't resolve debt problems and support countries to raise more revenue, poor global growth forecasts will continue.”

The G7 will consider ways to increase lending and aid through development banks. In May, G7 finance ministers noted that agreements made so far will yield more than $25 billion a year in additional finance for climate and other challenges. The largest provider of aid to the poorest countries, the International Development Association, needs substantial resources this year to maintain aid and loans with low interest rates.

“Together with G7 leaders, we won more than $130 billion in debt relief since Jubilee 2000,” shared LeCompte. “While we achieved significant debt relief and won anti-corruption policies, we failed to institute the policies we needed to prevent and resolve future debt crises. In Jubilee 2025, we must win real solutions to prevent debt crises and solve development challenges.” 

Read Pope Francis' June 5th Address on Debt Crises, Development and Jubilee 2025 here.

New York Senate Legislation Passes to Curb "Vulture" Fund Behavior

New York State Council of Churches, Jubilee USA Network, Oxfam and Partners In Health Issue Statement for Assembly to Pass and Governor to Sign "Champerty" Legislation and Urge Legislature to Pass Stronger Actions

A Senate bill (S5623) aimed at curbing predatory hedge fund behavior passed the New York Senate and is awaiting a vote in the Assembly (A5290) in order to head to Governor Kathy Hochul's desk to be signed into law.

"This legislation should become New York law as it addresses some of the ways that several hedge funds take advantage of developing countries," stated Eric LeCompte the Executive Director of Jubilee USA Network, an organization that works on debt and development policies. "This legislation is a step in the right direction. The legislature will need to take more comprehensive action to deal with all of the negative ways that New York's debt laws harm developing countries."

Advocates argue that more action is needed to improve New York laws that govern more than 50% of the world's private sector loans for countries.

The New York State Council of Churches, Jubilee USA Network, Oxfam and Partners In Health issue the following statement:

Thanks to Senator Krueger and Assemblymember Gonzalez-Rojas, their “champerty” bill (S5623/A5290) represents progress in limiting some of the worst, predatory behavior of the "vulture" hedge funds. As the bill (S5623) passed the Senate, the Assembly should pass the companion bill (A5290) and Governor Hochul should sign this legislation into law immediately.

Most effectively and importantly, the legislation reduces New York’s punitive prejudgment interest rate to a better level and places obstacles in the way of the most predatory speculators suing debtor countries in New York courts.

While this legislation is progress and may help curtail some predatory behavior, it does not deal with the greater concern for New Yorkers and developing countries of dealing with bad faith actors and hold-out behavior.

We support this champerty bill (S5623/A5290) and emphasize the importance of additional legislative action to address the larger issues where New York law harms developing economies.  A critical portion of champerty that would have addressed the larger problem of hold-out behavior and bad faith actors was removed under pressure from creditors.

Billions of people will suffer because creditors removed the good faith provision. The removed language would have ensured that all private creditors would be required to cooperate in qualified restructurings in good faith. Without this language, we lack protections for New York courts, New York taxpayers, poor countries, and official creditors like the United States government.

Legislators in New York have compelling public interest to pass additional legislation that can rectify the power imbalance in sovereign debt restructurings and can help solve these larger problems. While we celebrate progress and this victory with the Senate passage, New York legislators must continue their work to enact further comprehensive reforms such as those included in the Sovereign Debt Stability Act (S5542A/A2970) to ensure that all private creditors governed under New York laws operate responsibly.

 

New York State Council of Churches

Jubilee USA Network

Oxfam

Partners In Health

 

Read the Statement on the New York Senate Passage of the "Champerty" Bill (S5623/A5290) here.

Find the "Champerty" bill here.

View Jubilee USA's Sovereign Debt Stability Act (S5542A/A2970) webpage here.

Find the Sovereign Debt Stability Act bill here.

African Religious Organizations Call for Tripling Size of Vulnerable Countries Fund

Kenya President Ruto Hosts Heads of State and World Leaders for Aid Negotiations

The World Bank program that provides aid to poor countries should triple funding by 2030, said interfaith African organizations in a statement addressed to leaders meeting in Nairobi. On April 29th, the President of Kenya, William Ruto, hosts International Development Association (IDA) for Africa Heads of State Summit to mobilize funding for IDA. As the largest source of grants and low-cost, long-term loans to the poorest countries, IDA enables recipients to spend on poverty reduction and development priorities without adding to debt burdens.

“Countries in Africa, home to most of the IDA borrowers, spend three times servicing debt what they spend on health,” said Caritas Africa, the All Africa Conference of Churches, Islamic Relief and Jubilee USA Network in a statement. “In this region, which year after year sees the growing devastation of droughts, cyclones, land degradation and other effects of climate change, debt service amounts to 18 times their climate adaptation expenses.”

Negotiations with donors for replenishing the IDA aid program come to conclusion at the end of the year. IDA negotiates with donors and replenishes the aid resources every three years.

“Amidst staggering debt levels, IDA is the largest provider of funds that can help countries without creating more debt,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network, one of the organizations signing the statement. “Dramatically boosting IDA funds can address growing crises in some of the poorest countries.”

Average incomes in one-third of IDA countries remain below pre-pandemic levels. The last replenishment, finalized in 2021, generated $93 billion over the 2022-2025 period. However, IDA borrows the bulk of those resources from private markets, whereas donor contributions have dropped for the last 10 years.

Read the Caritas Africa, All Africa Conference of Churches, Islamic Relief and Jubilee USA Network Statement to Leaders Meeting in Nairobi for the International Development Association Heads of State Summit here.