The Jubilee Blog

World Bank and IMF Announce $1.1 Billion in Debt Relief for Chad

By Sophia Har

Shutterstock Images

The International Monetary Fund(IMF) and the World Bank announced $1.1 billion in debt relief for Chad. The money comes through the IMF and World Bank's two major debt relief programs: the Heavily Indebted Poor Country Initiative (HIPC) and the Multilateral Debt Relief Initiative (MDRI). Chad is the 36th country to receive HIPC relief and the first since 2012. Chad is the fourth-least developed country in the world. More than half its population lives in poverty.

"Debt relief for Chad means an investment in education and healthcare," said Eric LeCompte, executive director of the religious debt relief organization Jubilee USA Network, which advocated for the IMF and World Bank debt relief programs. "This is an important way to give Chad's people help."

As of 2013, Chad owed $2.2 billion to foreign lenders and spent over $100 million annually paying off debt. Prior to receiving debt relief, Chad owed around $800 million to the World Bank and $400 million to the African Development Bank. Chad also owes approximately $500 million to other governments. Under the relief plan, Chad receives $18 million in debt relief from the IMF, nearly $600 million from the World Bank and $236 million from the African Development Bank. Thirty-nine countries are eligible for HIPC debt relief. Qualifying countries must meet certain criteria and implement poverty reduction plans. Chad was granted relief even though it didn't meet all criteria. Critics of these plans argue that to qualify for debt relief, countries should not reduce any budget areas that protect vulnerable populations. The three other qualifying countries yet to receive relief are Sudan, Somalia and Eritrea.

Aftershocks Pummel Highly Indebted Nepal

Poor Country Spends 217 Million Annually on Debt Payments

By Sophia Har

Getty Images

Severe aftershocks continue to terrorize Nepal which was struck by a 7.8 magnitude earthquake on Saturday. The rising death toll climbed beyond 3,000 people. Nepal is one of the least developed countries in the world, ranking 145th out of 187 countries in the United Nations Human Development Index. According to the World Bank, Nepal owes $3.8 billion in debt to foreign lenders and spent $217 million repaying debt in 2013. Nepal owes approximately $1.5 billion each to the World Bank and the Asian Development Bank and $54 million to the International Monetary Fund (IMF). It owes $133 million to Japan and $101 million to China. 

“Nepal is one of the least developed countries in the world and needs immediate financing to recover,” said Eric LeCompte, executive director of the religious development coalition, Jubilee USA Network. "Relieving Nepal's debts not only provides resources now, but can also help the country rebuild."

Nepal is one of 38 countries eligible for assistance from the IMF's new Catastrophe Containment and Relief Trust (CCR). The IMF created the CCR in February to provide debt relief to poor countries impacted by natural disasters or health crises. The new fund canceled nearly $100 million in debt for Ebola-impacted countries. In order to qualify for relief from the new fund after a natural disaster, a country must meet certain criteria. The disaster must destroy more than 25% of the country's "productive capacity," impact one third of its people or cause damage greater than the size of the country's economy. It is not yet known if Nepal will qualify. Of the $54 million Nepal owes the IMF, $10 million is due in 2015 and nearly $13 million is due in 2016.

IMF Discusses Improving Debt Reforms Behind Closed Doors

By Sophia Har

Simone D. McCourtie / World Bank / CC BY-NC-ND

As debt restructuring looms for small islands and wealthy countries are embroiled in debt disputes, the International Monetary Fund (IMF) discusses aspects of a global bankruptcy regime at its Spring meetings. The IMF argues that debt restructuring is often "too little and too late," and released a series of papers over the last two years promoting aspects of global bankruptcy. Finance Ministers are considering staff suggestions from a 2014 IMF paper that would eliminate a "systemic exemption," which allows countries to get financing even when their debt needs to be restructured to reach sustainable levels.

"It's critical that we put countries on sustainable paths and not kick the can down the road," noted Eric LeCompte, executive director of the religious development organization Jubilee USA Network. LeCompte serves on expert working groups that are crafting a UN bankruptcy process. "Greece is one example of why we need to see these changes."

A May 2013 IMF paper focused on aspects of global bankruptcy that could be a road map to limit financial crisis, bring countries to sustainable debt levels and protect economies from predatory behavior. The United Nations General Assembly is currently working on a bankruptcy system that could become closer to US Chapter 11. Some of the world's chief financial jurisdiction countries are boycotting the process, including the United States, France, Germany, Japan and the United Kingdom.

"Something has got to change. There's global agreement that recurring debt problems are why inequality persists," said LeCompte. "The further we get away from the last global financial crisis, the closer we get to the next one."

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

World Bank Announces Package of Aid and Loans to Ebola-Affected Countries

By Kristen Quimby

As the Spring International Monetary Fund (IMF) and World Bank meetings open, the World Bank announced $650 million of new grants and concessional loans to the countries of Sierra Leone, Guinea and Liberia. About $220 million will be aid in the form of grants and the remainder will be in the f orm of highly concessional loans. Currently the three countries owe a combined $518 million to the World Bank. Liberia owes $105 million, Guinea $186 million and Sierra Leone $227 million.

“We urge the World Bank Group to consider bolstering their commitments with a new debt relief package for the impacted countries,” said Eric LeCompte, executive director of the religious development coalition, Jubilee USA Network. “We applaud the new aid for the affected countries and hope that the World Bank can come up with some rapid response plan to address this kind of crisis much faster in the future.”

The new financing is through the World Bank's International Development Association (IDA). The IDA determines its lending terms based on the borrowing country's risk of "debt distress."  The new IDA financing will be distributed as approximately 50% grants to Sierra Leone and Guinea and 100% as loans to Liberia. The loans will be repaid over 25 to 38 years. In February, the IMF announced $100 million in debt relief for the three West African countries and called on governments to contribute $70 million more. The IMF also set up a new debt relief fund for poor countries struck by natural disasters or health crises. 

"As a development institution, we need the World Bank to respond faster," said LeCompte, who serves on United Nations expert groups on debt. "It's ironic that the innovation for dealing with this crisis and future crises is coming from the IMF, whose mission is not development. World Bank innovation would look like a permanent facility to solely administer grants when the poorest countries face crisis."

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

IMF Reports Debt and Human Crises Drive Uneven Growth

Global Stability and Economic Outlook Reports Released

By Sophia Har

The International Monetary Fund (IMF) released its Global Financial Stability Report, noting "increased financial stability risks" in the global economy. The report notes that large-scale economic shocks are particularly concerning to global stability. It argues that such risks are greatest for countries with high debt levels and that emerging market countries must be prepared for external shocks. Particular concern is raised on the consequences of currency volatility, the shadow financial system and high corporate debt. The report is a follow-up to the IMF's semi-annual World Economic Outlook Report, which noted uneven global growth, particularly among developing economies.

"The IMF recognizes we need global structures to protect us when there's a major crisis," said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. "Countries with high debt levels are the most vulnerable to those crises."

The Global Financial Stability Report focuses on the systemic issues that create global economic trends. It notes that debt levels are rising in emerging markets and that increased risks over the past six months are impacting those countries the most. It argues that policy measures are necessary to "contain financial excesses" in global markets and to improve growth.

Grenada Reaches Debt Deal as Caribbean Mired in Debt Problems

Grenada Could Influence Global Debt Negotiations

By Sophia Har 

Grenada agreed to a debt plan with its Caribbean island investors that will result in a 50% reduction in the value of existing Grenada investment bonds. The deal offers investors a portion of future revenues from a government program designed to attract foreign investment. Although the deal addresses about $262 million in debt, the International Monetary Fund (IMF) reports that Grenada's total debt tops $907 million. According to the Central Intelligence Agency, nearly 40% of Grenada's population lives below the poverty line.

"Grenada's debt deal is a significant step in the right direction," said Reverend Sean Doggett, a spokesperson for the local Catholic Diocese and a founding member of Grenada's Jubilee Committee. Because of the correlation of debt levels to high poverty rates, Grenada's Jubilee Committee was organized by the Conference of Churches in Grenada to influence debt negotiations between investors, the IMF and the government of Grenada. "The Conference of Churches in Grenada continues to engage in this process and work with its partners in the region."

Other Caribbean islands are also dealing with unsustainable debts or attempting to renegotiate their debt levels. These islands include Antigua and Barbuda, St. Vincent and the Grenadines, St. Lucia, Dominica and Jamaica. Jubilee USA supported Grenada's Jubilee Committee and last year religious leaders across the small islands formed the Caribbean Debt Network (CDN) to join debt negotiations on all islands facing crisis.

Vanuatu Owes Millions in Debt as Island Nation Struggles to Recover from Monster Cyclone; Religious Coalition Calls for Debt Relief

By Sophia Har

The religious anti-poverty organization Jubilee USA Network is calling on international lenders to grant debt relief to Vanuatu. In mid-March, Cyclone Pam struck the string of small Pacific islands with winds up to 165 miles per hour. The category 5 storm destroyed or damaged nearly every building in the capital city and wiped out crops across the country. The United Nations warns that entire islands are facing imminent starvation and its President says the "monster" storm undid the nation's recent economic development. Vanuatu owes approximately $84 million to international lenders, including nearly $10 million to the World Bank.

"The World Bank and other international lenders can reduce Vanuatu's debt," said Eric LeCompte, Jubilee USA Network's Executive Director. "Vanuatu's people will need every single dollar they can get to rebuild."

Jubilee USA recently led a successful campaign to win debt relief for Ebola-impacted countries. In February, the International Monetary Fund (IMF) announced $100 million in debt relief for Guinea, Liberia and Sierra Leone. The IMF offered debt relief by creating the Catastrophe Containment and Relief Trust (CCR) to offer grant-like financing and debt relief to countries impacted by health crises and natural disasters. Although Vanuatu does not owe money to the IMF, the country cannot access grant financing from the trust because the country narrowly misses the income criteria for CCR relief. Thirty-eight of the world's poorest countries are eligible, but only two small-island nations currently fit the criteria of the special fund. Many small island states are heavily indebted and particularly vulnerable to strong storms.

"Small islands sit at the intersection of climate change, poverty and debt," noted LeCompte. "The World Bank needs to offer debt relief."

Vanuatu struggled with poverty before the storm hit and is ranked 131st out of 187 countries in the United Nations Human Development Index. The storm decimated the island's infrastructure. Aid workers report that desperate residents are drinking sea water and food supplies are running low. The United Nations Children's Fund (UNICEF) says 82,000 children are in need of aid and the country's remote location is making international relief efforts more difficult. UNICEF says those children are located on 22 different islands.

"Vanuatu's recovery is crippled by high debt burdens," said LeCompte who serves on United Nations finance expert groups. "The world can't turn a blind eye to the stark reality on the ground. A sustained recovery must include debt relief."

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 Proposes Plans to Tackle Tax Evasion and Corruption

By Sophia Har

The Greek government submitted proposals over the weekend to access further emergency funding, but Eurozone leaders say plans still need improvement. Interior Minister Nikos Voutsis of Greece was quoted in Germany's Spiegel news magazine that Greece may not make a €450 million payment to the International Monetary Fund (IMF) if it does not receive more financing by April 9. Government spokesperson Gabriel Sakellaridis denied that Greece would forgo IMF payments.

"This is a poker match between Greece, the IMF and the European Union," said Eric LeCompte, Executive Director of the religious debt relief organization Jubilee USA Network. "The stakes are high with millions of ordinary people's lives on the table."

Greece's Syriza party vowed to end austerity measures and renegotiate the country's debt after winning national elections in January. The Greek government submitted a list of proposed reform measures in February to unlock a four-month extension to its current loan deal with the EU, IMF and European Central Bank. The EU rejected those proposals and instructed Greece to submit new reforms. Greece is also seeking debt relief and indicated it would pay for domestic services before paying its debt if forced to choose. Greece is the most heavily indebted country in Europe and the third most indebted in the world.

"This ongoing dispute is more evidence that we need a global bankruptcy process with clear rules," said LeCompte, an expert to United Nations finance working groups. "Otherwise we're just gambling with people's lives."​

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