The Jubilee Blog

Puerto Rico Oversight Board Holds First Meeting: Independent Experts Monitor Board and "PROMESA" Legislation

By Greg Williams

The newly created Puerto Rico economic oversight board holds its first meeting and will elect a chair on September 30 in New York City. Congress created the 7-member board as part of legislation to address the island's debt crisis. An independent group of academics, lawyers, finance experts and civic leaders formed a task force to monitor the oversight board and the progress of the Puerto Rico debt legislation. 

"We need to make sure that the Puerto Rico legislation lives up to what we were promised," noted Eric LeCompte, Jubilee USA's executive director who is joining the independent expert group. LeCompte is a UN debt expert and testified before Congress on the Puerto Rico crisis. "If the legislation and oversight board are successful, we should see the debt become sustainable, austerity prevented, greater budget transparency and positive economic growth recommendations."

The group of "monitoring" experts or Centro Round Table on Puerto Rico was formed by‎ Dr. Edwin Melendez of Hunter College in New York ‎and executive director of the Center for Puerto Rican Studies (Centro) at Hunter College. The membership of the task force includes Carlos Cuevas, Esq., Law Practice;  Hon. Luis A. Gonzalez, Justice of the Appellate Division, First Judicial Department-Retired; Dr. Juan Lara, UPR; Eric LeCompte, Jubilee USA; Rev. Heriberto Martinez, Coalición Ecuménica; Dr. Edwin Melendez, Hunter College-CUNY; Dr. Efraín O'Neill-Carrillo, PE. Energy Systems Researcher; Ricardo Oquendo, Esq. Puerto Rican Bar Association; Roseni Plaza, National Employment Lawyers Association of New York; Dennis Rivera, Unidos Por La Salud; Ruth Santiago, Esq., Legal Counsel, El Puente; Gretchen Sierra-Zorita, National Hispanic Foundation for the Arts; Anthony Suarez, Esq., Puerto Rican Bar Association of Florida; and Brenda Torres, San Juan Bay National Estuary Program.

In a statement about the independent task force, Melendez called Puerto Rico's pending debt restructuring the largest in the history of the United States. "Debt restructuring must be undertaken in a manner that takes into account the welfare of the most vulnerable segments of the population," Melendez noted.

Puerto Rico owes more than $70 billion in debt and avoided a large-scale default in July when Congress intervened. 

Read more about the Puerto Rico economic oversight board

Read more about the Puerto Rico debt crisis legislation that created the oversight board

Read the Centro Round Table on Puerto Rico's press release

Read a timeline of Puerto Rico's debt crisis

Invite: Payday, Puerto Rico and Student Loans

Dear Friends,

In recent months, together we won solutions for greater transparency in the global financial system. We moved forward solutions to Puerto Rico's financial crisis. 

Now I'd like to invite you to join us again as we work on payday lending, Puerto Rico's crisis and student debt.  You can join hundreds of communities across the US and participate October 14-16 in Jubilee Weekend 2016.

Please sign up if you can organize an event or if your religious community can offer one prayer for our neighbors impacted by predatory lending and debt crises. When you sign up, we'll send you materials that you can use to host an event at your house or sample prayers to be offered at your worship service.

Our theme this year is "Love Your Neighbor," as we pray and act for solutions to debt crises impacting communities across the United States and Puerto Rico. We'll focus on predatory "payday" lending, student debt and the ongoing debt crisis in Puerto Rico.

Payday loans are targeted at low-income communities where residents have little access to credit and struggle to make ends meet. The average payday loan carries an annual interest rate of nearly 400% - many borrowers take out as many as 10 payday loans to pay off the initial loan, creating a descending spiral of debt. This same type of debt spiral threatens Puerto Rico and its people as the Zika virus spreads and more Puerto Ricans leave the island. Meanwhile, student debt in the US has passed $1.3 trillion and a number of student lenders are under scrutiny for predatory lending and debt collection practices.

Sign up and join us October 14-16 to "Love Your Neighbor." Organize an event or offer one prayer for solutions to financial crisis that protect the vulnerable. We'll help you with actions, sermons, prayers and any other creative idea you have for a successful Jubilee remembrance.‎

Gratefully,

Eric LeCompte
Executive Director
www.jubileeusa.org/support-us

 

Mozambique President Comes to US

On September 15th, Mozambique's President Filipe Nyusi came to Washington, DC for a series of meetings with International Monetary Fund (IMF) Managing Director Christine Lagarde, World Bank President Jim Yong Kim, Secretary John Kerry and US AID's Gayle Smith. The IMF suspended loans and the World Bank suspended direct aid to Mozambique after learning the country hid more than $1 billion in debt.

 

Jubilee USA's thoughts on the visit, and Mozambique's ongoing debt and transparency crisis, were featured in Voice of America, African Business Review and Reuters.

FMI continua a aguardar auditoria às "dívidas secretas" de Moçambique - Voice of America

 

Mozambican President to meet with IMF; what will the outcome be? - African Business Review

 

IMF says Mozambique president to cooperate on debt audit - Reuters

UN Conference on Trade and Development Warns Global Economy is in "Fragile State"

UN Report Launched with Vatican

by Greg Williams

A report released from a UN group calls the global economy "fragile" and urges action on trade, tax and debt policies to improve economic growth. The United Nations Conference on Trade and Development's (UNCTAD) annual "Trade and Development Report" notes rising debt and inequality levels. The report warns that current economic challenges may be more difficult to manage than the 2008 global financial crisis.‎

"It's clear that economic growth and global inequality are impacted by debt, tax and trade policies," noted Eric LeCompte, the executive director of the religious development coalition Jubilee USA. LeCompte serves on UN experts groups on debt and development. "This report reminds us that we need to learn from the last global financial crisis if we are going to stop the next crisis."

Mozambique President Meets IMF and World Bank As Debt and Corruption Concerns Loom

Mozambique President Filipe Nyusi is in Washington for a series of meetings with International Monetary Fund (IMF) Managing Director Christine Lagarde, World Bank President Jim Yong Kim, Secretary John Kerry and US AID's Gayle Smith. The IMF suspended loans and the World Bank suspended direct aid to Mozambique after learning the country hid more than $1 billion in debt. The Fund requested an audit of Mozambique's debt before resuming lending. Mozambique's debt is equal to 86% of the size of its economy and grew 144% between 2010 and 2014.

"These are emergency meetings in a time of crisis," noted Eric LeCompte, the executive director of the religious development coalition Jubilee USA. LeCompte serves on UN experts groups that focus on sovereign debt. "We have great concern for how this crisis impacts people living in one of the world's poorest countries."

In 2013, international banks loaned Mozambique $800 million to build tuna fishing boats, but more than $500 million of those funds may have been used to purchase military equipment. The banks loaned an additional $600 million for naval equipment that was not disclosed to investors and international financial institutions. In Mozambique, concerns grow that these monies were secured in ways that violated budget transparency and parliamentary approval laws.

According to the United Nations, Mozambique is the world's ninth poorest country. More than half of its population lives in poverty. Mozambique paid approximately $169 million in debt service in 2014, more than triple what it paid in 2011. According to research from Global Financial Integrity, the country loses an average of $243 million each year to crime, corruption and tax evasion.

"Audits are important government accountability tools for citizens," stated LeCompte. "We also need to see improved regulation in the global financial system that encourages budget transparency and promotes responsible lending and borrowing."

New Report Finds Corporate Offshore Tax Avoidance ‎a Growing Problem

By Greg Williams

According to a new report, secretive offshore tax avoidance practices are on the rise among multinational businesses. The report, released from the Financial Accountability and Corporate Transparency Coalition (FACT), finds that these practices put investors at risk because they are caught off guard when governments act to collect the lost tax revenue. The report recommends that the Securities and Exchange Commission (SEC) collect greater information from corporations on what taxes are being paid and which governments are receiving payments.

"This type of corporate tax avoidance is a theft from poor communities across the United States and around the world," noted Eric LeCompte, the executive director of the religious development coalition Jubilee USA and a member of FACT's executive committee. LeCompte served on a UN expert group that investigated this behavior. "This report demonstrates that hiding money offshore even harms the very people who invest in these companies."

The report references three prominent companies that may have used tax avoidance practices in recent years and now face action from tax authorities. The report urges the SEC to collect "country-by-country reporting" information which requires multinational corporations to annually disclose what payments they make to governments where they operate. Companies are already required to file these reports with the IRS but filing them with the SEC would give shareholders access to the information.

According to a 2016 report from the development organization Oxfam America, corporate tax avoidance drains approximately $111 billion a year from the United States, and an estimated $100 billion from some of the world's poorest countries.

"Financial transparency is essential to protect the most vulnerable," stated LeCompte. "The SEC should adopt country-by-country reporting as soon as possible."

Read the report: A Taxing Problem for Investors: Shareholders Increasingly at Risk from Lack of Disclosure of Corporate Tax Practices

Read more about corporate tax avoidance

New Report Links Zika Virus to Steep Increase in Birth Defects in Brazil

by Greg Williams

A new study published by the Centers for Disease Control and Prevention connects the spreading Zika virus to a significant increase in birth defects in Brazil. According to the study, birth defects involving the nervous system nearly doubled after Zika arrived in Brazil, and researchers linked the virus' spread to poverty and living conditions in Northeast Brazil. Brazil is currently in the deepest recession of its history and its debt grew 33% in the past 5 years relative to the size of its economy.

Recent News Hits

 

By Greg Williams

Over the past week, Jubilee USA's views on the newly announced Puerto Rico fiscal oversight board were featured in the Wall Street Journal, Morning Consult and Barron's.

Wall Street Journal: http://www.wsj.com/articles/white-house-set-to-announce-oversight-board-for-puerto-rico-1472660069

Morning Consult: https://morningconsult.com/2016/08/31/creditors-advocates-optimistic-as-obama-names-puerto-rico-oversight-board/

Barron's: http://blogs.barrons.com/incomeinvesting/2016/08/31/meet-the-members-of-puerto-ricos-new-financial-oversight-board/

US and Puerto Rico Faith Groups Send Congress Recommendations on Island's Crisis

By Greg Williams

Religious leaders in Puerto Rico and Jubilee USA urged a new Congressional task force to reform US laws to promote economic growth in Puerto Rico. The recommendations were formally submitted to the Congressional Task Force on Economic Growth in Puerto Rico, created as part of Puerto Rico debt crisis legislation signed by President Obama in late June. The task force consists of eight members of Congress and is required to recommend changes to Federal laws and programs to spur economic growth, reduce child poverty and promote job creation in Puerto Rico.‎‎

"We are on the front lines of not just a debt crisis but a growing humanitarian crisis,” the religious leaders wrote. The leaders include San Juan's Catholic Archbishop Roberto González Nieves and Reverend Heriberto Martinez Rivera, General Secretary of the Puerto Rico Bible Society. "We believe Congress can take concrete actions to generate economic growth and reduce child poverty in Puerto Rico."

Senator Orrin Hatch (R-UT) chairs the task force, which includes Senator Robert Menendez (D-NJ), Senator Marco Rubio (R-FL), Senator Bill Nelson (D-FL), Representative Sean Duffy (R-WI), Representative Tom MacArthur (R-NJ), Representative Nydia Velázquez (D-NY) and Representative Pedro Pierluisi (D-Puerto Rico). The task force invited the public to send submissions to guide its work by September 2. The task force's work concludes December 31.

The religious development coalition, Jubilee USA submitted recommendations related to healthcare, income, energy and child poverty reduction policies. Jubilee led efforts to amend the Puerto Rico debt legislation to include reducing child poverty in the task force's mandate. Jubilee USA echoed Puerto Rico's religious leaders' call to reform the Supplemental Security Income program, the Earned Income Tax Credit, the Child Tax Credit and Medicaid funding. 

"In any recommendations that the task force makes, we urge you ensure that any recommendation will help alleviate child poverty on the island," noted Executive Director Eric LeCompte in Jubilee USA's submission to the task force.

Read Jubilee USA's submission to the Congressional Task Force on Economic Growth in Puerto Rico

Read the religious leaders' submission to the Congressional Task Force on Economic Growth in Puerto Rico

Read more about the Jubilee child poverty amendment to the Puerto Rico Oversight, Management and Economic Stability Act

Read a timeline of Puerto Rico's debt crisis