The Jubilee Blog

UN, Presidents and Prime Ministers Discuss Coronavirus Financial Crisis Solutions

By Zach Conti 

Washington DC – Presidents, prime ministers and world leaders focused on solutions for the global economic crisis spurred by the coronavirus at a virtual United Nations meeting. "Financing the 2030 Agenda for Sustainable Development in the Era of COVID-19 and Beyond," is the largest heads of state meeting organized to confront the financial crisis created by the pandemic. 

"Six months into the pandemic and hundreds of millions of people are experiencing hunger, losing their jobs and being thrown into the ranks of poverty," said Eric LeCompte, Executive Director of the religious development group Jubilee USA. LeCompte was part of the multi-month process that developed the options considered by world leaders at the special UN meeting. "Poor and vulnerable people bear the brunt of this economic crisis."

The UN estimates 265 million people now face famine and 100 million people will enter extreme poverty due to the pandemic. Since the beginning of the coronavirus crisis, 500 million jobs were lost according to the International Labor Organization.

Developing countries spent less than 3% of the $11 trillion spent on COVID stimulus packages and economic aid. Nearly 90% of these stimulus monies were spent in wealthy countries.

"World leaders are considering options to bolster crisis response aid for developing countries," stated LeCompte. "Debt relief, curbing tax evasion and accessing global reserve funds are some of the options on the table."

The heads of state meeting was convened by United Nations Secretary-General António Guterres, the Prime Minister of Canada, Justin Trudeau and Andrew Holmes, the Prime Minister of Jamaica.

In October the G20, IMF and World Bank could implement some of the solutions discussed at the UN meeting.

G7 Finance Ministers Support Debt Relief for Poor Countries Combating COVID-19 Crisis

Washington DC - The G7 supports a process for debt cancellation for vulnerable countries, they announced this morning after Treasury convened a special Finance Ministers meeting. In a G7 statement, the ministers also encouraged an extension of the G20 Debt Service Suspension Initiative (DSSI) into next year for the world’s 73 poorest countries.

"The G7 recognizes that some countries will need debt cancellation and now is calling for a process to cut debts," stated Eric LeCompte, the Executive Director of Jubilee USA Network and a United Nations finance expert. "With the poorest countries struggling with the economic and health impacts of the coronavirus, countries desperately need more aid and debt relief."

In April, the G20 agreed to a process for the 73 poorest countries to stop paying debts through 2020. So far, the initiative has allowed 43 of the poorest countries to free $5.3 billion for health and social spending to respond to the pandemic.

The G7 statement encouraged private creditors and banks to "voluntarily" participate in the debt payment suspension and seemed to criticize China for not fully participating in the initiative.

"Reading between the lines, the G7's statement is hard on China and weak on private creditor participation," said LeCompte. "All Chinese government entities should stop taking debt payments from poor countries and stronger action must be taken to ensure the private sector joins the coronavirus debt relief initiatives."

Earlier this month, several Finance Ministers joined the World Bank and IMF chiefs in calling to extend the DSSI into 2021 and arguing that private creditors should stop collecting poor country debts.

"It's time to extend debt relief initiatives to all developing countries, including Middle-Income Countries, struggling with the coronavirus pandemic," shared LeCompte. 

In October and November, G20, IMF and World Bank meetings will discuss the future of coronavirus debt suspension and relief efforts.

Read the G7 Statement here.

Developing Countries Lose Trillions from Crime and Tax Abuse, Says UN Panel

By Zach Conti 

 A high-level United Nations panel report says global policies are needed to prevent trillions of dollars escaping developing countries through tax abuse and corruption. The UN group includes former heads of state, past central bank governors, business leaders and prominent academics.

"As countries combat the health and economic impacts of the coronavirus, they could use the lost revenues from tax avoidance, crime and corruption," stated Eric LeCompte, United Nations finance expert and Executive Director of the religious development group Jubilee USA Network. "Countries can emerge from the pandemic with resilience and fund public services if we can curb these staggering revenue losses."

The United Nations High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (FACTI Panel), reported that around $1.6 trillion is laundered per year. Due to corporate tax avoidance in the form of profit-shifting, $500 billion is lost to governments each year globally. The UN panel report comes only days after the International Consortium of Investigative Journalists released the “FinCEN files," revealing that global banks moved more than $2 trillion over an 18-year period in suspicious transactions due to a lack of enforcement.

"Hopefully the report is a wake-up call," said LeCompte. "We must move forward global agreements and policies that increase transparency in the financial system."

The FACTI panel will release a final report in February 2021. 

Finance Ministers and United Nations Discuss COVID Crisis Solutions

By Zachary Conti 

 

IMF Announces Access to Global "SDRs" Reserve

 

The majority of developing countries face deepening crises, IMF head Kristalina Georgieva told a global meeting of Finance Ministers. Georgieva spoke during, "Financing the 2030 Agenda for Sustainable Development in the Era of COVID-19 and Beyond." The coronavirus crisis meeting was convened by the UN Secretary General and Finance Ministers of Canada and Jamaica.

"The economic and health impacts for poor people around the world are worsening," stated Jubilee USA Executive Director Eric LeCompte. LeCompte participated in the multi-month COVID-19 response process that created options for Finance Ministers to confront the crisis. "Unless we move forward additional aid and relief, too many countries could wrestle with lost decades of development."

Mahmoud Mohieldin, the UN Secretary General's Special Envoy on Financing the 2030 Agenda, explained during the meeting that while some advanced economies spend the equivalent of 10% of their economic output on pandemic response programs, poor countries cannot even reach 1% of spending.

Georgieva announced the deployment of global reserve funds or Special Drawing Rights. Roughly, $176 billion of these monies are currently held by wealthy countries and could be donated to poor countries.

“We welcome the IMF announcement to disburse billions of dollars of Special Drawing Rights to confront this crisis. As we count the impacts of this crisis in the trillions, G20 Finance Ministers should agree to issue trillions more in global reserve funds," said LeCompte. 

The World Bank and several Finance Ministers joined the IMF in a call to extend a 2020 coronavirus debt relief initiative into 2021 to support the 73 poorest countries. World leaders also argued that private banks and creditors should stop collecting poor country debts.

"The bare minimum that world leaders must do now is extend debt payment suspensions for poor countries into next year," noted LeCompte. "Further actions are also critical to protect vulnerable communities and to help all of us emerge with resilience from this crisis. The private sector must be compelled to offer debt relief, more developing countries need aid and some countries need to see their debts permanently reduced."

Several high-level participants urged the need to address revenue losses of countries because of tax evasion, corruption and other illicit financial flows.

Heads of State meet during the UN General Assembly on September 29th to consider the crisis proposals discussed at the Finance Ministers meeting. In October and November, the G20, IMF and World Bank hold additional decision-making meetings.