The Jubilee Blog

House Sub-Committee Holds Puerto Rico Bankruptcy Hearing:Heavily Indebted US Territory Seeks Chapter 9 Protection

By Sophia Har

A US House of Representatives Judiciary sub-committee is discussing legislation to give Puerto Rico's public utilities access to US bankruptcy protection. The Subcommittee on Regulatory Reform, Commercial and Antitrust law is meeting to debate HR 870, a bill introduced by Puerto Rico's Representative in Congress. Puerto Rico has more than $70 billion in public debt, about $20,000 per resident. The island's government attempted to restructure its public utility company's debts but was stopped by a court ruling. As a territory, Puerto Rico cannot access International Monetary Fund (IMF) loans and isn't eligible for the bankruptcy laws that govern US cities and states.

"Puerto Rico is in a debt trap and this bill could be a way out," noted Eric LeCompte, executive director of the religious anti-poverty group, Jubilee USA Network. "In this case, bankruptcy laws can help, just as a global bankruptcy process could help all countries around the globe."

Some financial firms that hold Puerto Rican bonds oppose the bill. Those funds won a recent court decision to block the island's public utility company's $9 billion debt restructuring. Meanwhile, some hedge funds involved in Puerto Rico have been involved in allegedly predatory behavior elsewhere, including Aurelius Management, one of the lead plaintiffs in the Argentine debt dispute.

Jubilee Talks Greece and Taxes on World's Largest Television Network

By Andrew Hanauer

Greece is the world's third-most indebted country, and the most indebted in Europe. Five years ago, in the midst of a significant financial crisis, Greece received emergency loans from the International Monetary Fund, European Central Bank and European Union. As part of that agreement, Greece undertook a number of harmful austerity measures that worsened its economic situation.

Nearly a third of Greeks live in poverty. Youth unemployment has reached 50% and at one point the economy contracted for 5 years in a row. Against this backdrop, Greece elected a new government last month that pledged to renegotiate the country's debts and end the austerity policies.

One of Greece's biggest concerns is tax collection - in January alone, Greece came up 1 billion euros short of collection targets. This lost revenue is a big reason for Greece's debt and austerity problems. The new government, as part of a deal with the Eurozone, is pledging to crack down on tax evasion.

 

Our Executive Director Eric LeCompte was on CCTV America last night to talk about this issue. CCTV is the world's largest tv broadcaster, reaching more than 1.2 billion people. You can watch Eric's interview here and please share the link with family and friends.

 

http://www.cctv-america.com/2015/02/25/eric-lecompte-of-jubilee-usa-network-discusses-greek-tax-reform

 

Jubilee USA Network is an alliance of more than 75 US organizations and 400 faith communities working with 50 Jubilee global partners. Jubilee's mission is to build an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA has won critical global financial reforms and more than $130 billion in debt relief to benefit the world's poorest people. www.jubileeusa.org

 

Greece Reaches Deal with European Union on Debt Crisis

By Sophia Har

Greece reached a deal with Eurozone Finance Ministers to extend the country's financial support package. Greece will submit a list of potential economic reforms by Monday for review. The deal extends loans to Greece for four months. Greece had sought a six-month extension. Greece's government came to power last month amid calls to end the country's loan program with the European Central Bank, European Union and International Monetary Fund and to cancel the country's austerity programs and renegotiate its debt. Greece is the world's third most indebted country. 

Eric LeCompte, Jubilee's Executive Director, released the following statement:

"It's exciting that Greece and the European Union have reached some deal. This should give Greece some breathing space to provide the kind of relief the country needs.

Jubilee and Debt in the News

By Sophia Har

Two weeks ago the International Monetary Fund (IMF) announced its new debt relief plan for the Ebola-affected countries of Guinea, Sierra Leone and Liberia. Meanwhile elections in Greece put debt and austerity policies in the international spotlight.

On Thursday, February 19, Jubilee USA Campaigns Director Andrew Hanauer shared our work on Ebola debt relief and our perspectives on Greece's debt crisis on WMNF radio. Listen to Andy's interview here.

United Kingdom Donates to New Ebola Fund

by Andrew Hanauer

The United Kingdom announced today it is donating approximately $50 million to the new International Monetary Fund (IMF) debt relief fund. The IMF created the fund - the Catastrophe Containment and Relief Trust (CCR) - last week as part of its $330 million Ebola financing package. As part of that package, the IMF announced $100 million in Ebola debt relief and called on governments to contribute $70 million more. The UK is the first government to donate.

The CCR is an important tool in the fight against poverty - it provides a pool of debt relief money for poor countries impacted by natural disasters or health crises. The fund is the successor to the Post Catastrophe Debt Relief Trust (PCDR) that Jubilee USA moved the IMF to create after Haiti's devastating 2010 earthquake. The IMF used the PCDR to cancel Haiti's debt.

Jubilee USA urged the White House in successive meetings last Fall to use the PCDR for Ebola-impacted countries. Those three countries - Guinea, Liberia and Sierra Leone - pay tens of millions of dollars in debt each year and are three of the poorest countries on earth. In November, the White House took Jubilee's proposal to the G20, calling on the IMF to cancel $100 million in Ebola debt. At the G20, the IMF announced a $300 million package, which it then unveiled last week.

IMF Plan Offers $170 Million in Debt Relief for Ebola-Impacted West Africa: IMF Debt Facility Can Now Aid World's Poorest Countries During Crises

By Sophia Har

The International Monetary Fund (IMF) is providing $330 million of financing to aid Ebola-impacted countries. The plan includes $170 million of debt relief and grant-like aid for Liberia, Sierra Leone and Guinea. The new plan also expands a debt relief facility previously used to cancel debt after Haiti's 2010 earthquake. The new expanded facility, the Catastrophe Containment and Relief Trust (CCR), is now a permanent debt relief facility for the world's poorest countries when they experience shocks such as epidemics or natural disasters.

"This aid is so vital for the countries affected by Ebola," said Eric LeCompte, Executive Director of the religious anti-poverty organization Jubilee USA Network. "Now we have a permanent debt relief vehicle for when the poorest countries face certain crises. Essentially, a global social safety net is now in place to protect the least developed countries when they experience disasters."

$100 million of debt relief will come through the IMF's new Catastrophe Containment and Relief Trust. Another $70 million in debt relief will come from other governments who hold debt in the three countries. Concessional loans of $160 million add up to a grand total of $330 million in new financing. The package also includes a new financing mechanism designed to deliver funds to disaster-impacted countries quickly without worsening debt burdens.

President Obama Says Greece Needs "Growth Strategy," Criticizes Austerity

By Sophia Har

President Obama criticized Greek austerity programs in an interview that aired on CNN on Sunday. The United States President said: “You cannot keep on squeezing countries that are in the midst of depression.” Obama called on all sides to compromise and argued, "when you have an economy that is in a free fall there has to be a growth strategy and not simply the effort to squeeze more and more out of a population that is hurting." His comments follow French Finance Minister Michel Sapin's call for a "new contract" between Greece and Europe. The anti-austerity Syriza party won Greece's elections and is seeking to renegotiate Greek debt. Greece is the third-most indebted country in the world.

"Austerity simply doesn't work," said Eric LeCompte, Executive Director of the religious financial reform organization Jubilee USA. "I think President Obama and French leaders understand there needs to be an alternative."

Mr. Sapin met Sunday with Greece's Finance Minister Yanis Varoufakis and said Europe should review austerity policies within the Eurozone. The French minister said Europe should also discuss Greece's debt situation and he and President Obama both called on Greece to make internal reforms. Greece began a series of austerity measures in 2010 as part of its emergency loan from the European Central Bank, International Monetary Fund and European Union. Since 2010, Greek unemployment doubled and the country lost 400,000 jobs in 2012. The Greek economy contracted every fiscal quarter for five years.