The Jubilee Blog

The Global Covid Response Is Leaving Millions Behind

By Eric LeCompte

 

We can only end the pandemic if we end it everywhere. Yet, across the world, Covid recovery efforts are leaving hundreds of millions of people behind. As policymakers seek the best way out of the crisis, their efforts should incorporate what we now know: It’s more difficult for developing countries to respond to the pandemic. 

The Covid-19 crisis hit developing countries harder than wealthy countries and the effects will linger longer. The International Monetary Fund projects that advanced economies will return to their prepandemic growth trends in 2022, while developing countries will see persistent losses continue for several more years.

A new interactive map and database published by my organization, Jubilee USA Network, and our partners, LATINDADD, shows why developing countries face greater pandemic health and economic challenges.

The database, called the Atlas of Vulnerability, identifies pre-existing challenges that 24 developing countries in Latin America and the Caribbean face. These vulnerabilities heightened the impact of the coronavirus crisis. While these developing countries are crushed by the ongoing pandemic, they are left out of solutions decided by world leaders because they are not classified by the World Bank as “low-income.” 

The World Bank classifies countries by their population’s average income. No countries are classified as low-income in Latin America or the Caribbean. Not even Haiti, the poorest country in the hemisphere. Yet—all countries are developing and most struggle with poverty rates above 20%.

Data about the challenges that complicated pandemic response in developing countries is just emerging and in many cases is missing. 

Our research map allows users for the first time to view and compare top vulnerability factors and compare them with benchmarks from developed economies. The result is an online interface that provides a holistic picture of the social, economic, and environmental factors hindering recovery in Latin America.

Pre-existing vulnerabilities made countries ill-prepared for the pandemic and made the pandemic worse. 

Take health, for instance, where countries are paying the price for years of underinvestment. In all but two countries we researched, government health spending per person is less than a quarter of the amount spent in industrialized countries. Most of these countries saw death rates skyrocket during the pandemic.

Schools closed for more than 85% of teaching days in 2020 in half of the countries. The combination of low internet access and school closures potentially permanently set back children’s education.

Their economies are also more vulnerable. Tax revenue in six of the countries is less than half the average tax revenue in developed countries. Dependence on tourism, money from relatives in wealthy countries and exports all fell for countries in the region because of the pandemic. For more than half of the countries, dependence on tourism is higher than the world average.

Poverty has also increased in all Latin American countries since the dawn of the pandemic.

With depleted budgets and spending more on urgent pandemic needs, investment in climate action will suffer as well. Hurricanes Eta and Iota were stark reminders of the unrelenting pace of the climate crisis in a region where 75% of countries show less climate response than the global average.

These “middle-income” developing countries have limited access to concessional financing and have been, for the most part, left out of debt relief initiatives in the response to the Covid crisis so far. In Latin America and the Caribbean, nearly 60% of income from exports pays debt. 

The Atlas of Vulnerability research contributes to a more effective, inclusive and resilient global pandemic crisis response. By bringing attention to the broader challenges in all developing countries, at all income levels, we can provide better solutions. The atlas can guide decisionmakers on how to target recovery policies so countries can become more resilient to public health crises and economic shocks. 

This all underlines the need for a more effective global pandemic response. We need to pay more attention to the broader challenges that face developing countries. Only then can we ensure that the response of the international community better supports them to overcome the pandemic.

G20 Focuses on Vaccines, Health, Economy and Climate During Rome Summit

By Jack Scott

President Biden joins G20 heads of state in Rome to discuss COVID response, vaccines, debt, economic crisis and climate policies. This is the first in-person meeting of the leaders since before the onset of the pandemic.

“Decisions by the G20 on the pandemic will shape global health, economic and climate policies for years to come,” shared Eric LeCompte, a United Nations finance expert who heads the religious development group Jubilee USA Network. “The world is waiting for the G20 to provide a plan on getting 70 percent of the globe vaccinated next year."

Financing of vaccines and prevention of future global health crises will be a focus of the G20 meetings.

Ahead of the G20 summit, Jubilee USA Network organized nearly 300 religious groups, labor unions and anti-poverty, environmental and human rights organizations to write a letter to press President Biden, the Italian G20 chair and head of the IMF to address poverty and climate policies in pandemic response.

G20 leaders travel to Glasgow after the Rome meetings for a UN-convened summit on climate. 

"What the G20 decides this weekend on climate policies will impact decisions at the upcoming climate conference," said LeCompte. "Responding to the pandemic means that developing countries have even less capacity to address climate change."

Jubilee USA Network joined LATINDADD to release a report and research database ahead of the G20 summit on vulnerabilities that affected developing countries during pandemic. One of those vulnerabilities the two groups focused on was climate change.

"Our research found that too many developing countries are left out of G20 pandemic response processes because they are ranked as middle-income developing economies," stated LeCompte. "World leaders can use our research as a tool to ensure adequate pandemic response for all countries struggling with the coronavirus health and economic crises."

Puerto Rico Votes to Bring 4-Year Bankruptcy to an End

Settlement Poised for Judge's Confirmation 

By Mahati Kalaparthy

 

Puerto Rico’s Senate and House passed a deal that settles $35 billion in Puerto Rico debt and will save the island two-thirds in debt payments.

"Puerto Rico voted to end the bankruptcy process that the island has gone through for four years," stated Eric LeCompte, the Executive Director of Jubilee USA Network. LeCompte worked with Puerto Rico religious leaders on solving the island's debt crisis since 2015. "With natural disasters, high child poverty rates and uncertain economic forecasts, we are concerned that Puerto Rico will be able to make the debt payments."

Bondholders receive $7 billion in cash and other benefits.

"We are worried that Puerto Rico may need to restructure its debt in a few years," shared LeCompte.

Judge Laura Taylor Swain, overseeing Puerto Rico’s 4-year bankruptcy process, ordered a mediation to settle remaining differences between the legislation and Puerto Rico's federally installed Financial Oversight and Management Board. Differences remain over pension issues in the debt deal.

The judge could confirm the agreement on November 8th.

World Leaders and Development Banks Coordinate Investments to Fight Pandemic, Poverty and Climate Change

Heads of state, finance ministers and 450 public banks conclude two days of meetings for the second “Finance in Common Summit” in Rome. The summit focuses on agricultural development and previous commitments on COVID recovery, development and climate policies.

“The summit convenes world leaders and banks to align $2.3 trillion, or ten percent of all global investments in common development goals,” noted Eric LeCompte, a United Nations finance expert and Executive Director of the religious development group Jubilee USA Network. “Coordinating lending and aid can help developing countries respond to the worsening health and economic crises spurred by the pandemic.”

Increasing agriculture investments, as millions face starvation and food shortages, is a central theme of the summit. Ahead of a November conference on climate, banks assess their contributions on climate policies.

“Development banks must make the case that they can increase financing for poor countries by accepting donations from wealthy countries,” shared LeCompte. “In August, wealthy countries received $400 billion of an emergency IMF currency that can be shared with development banks for pandemic and climate response efforts.”

The IMF created $650 billion of emergency currency, or Special Drawing Rights, to help countries respond to the pandemic. The G20 and IMF are working on processes for wealthy countries to disburse some of their currency holdings to poor countries.

Faith Communities around the Country and World call for a COVID Response that Prioritizes the Poor and the Planet

By Olivia Engling

World leaders met for annual IMF, World Bank and G20 meetings. The IMF lowered economic growth projections for all countries, and downgraded United States growth projections for 2021.

"World leaders agree that low vaccination rates in developing countries lead to more COVID variants and economic challenge for all countries,” noted Eric LeCompte who heads the religious development coalition Jubilee USA Network. “The IMF and G20 failed to offer a plan to get vaccinations and sufficient aid to developing countries. The crisis will worsen unless we get this done quickly."

The IMF shared that less than 4% of the population in low-income countries is vaccinated.

In August, the IMF created $650 billion in emergency currency for pandemic response which could help with vaccination distribution. G20 finance ministers are working on ways for wealthy countries to transfer their emergency currency or Special Drawing Rights to poor countries. Wealthy countries hold more than $400 billion in pandemic response funds.

“Wealthy countries should donate, rather than loan, their emergency currency reserves that they cannot use to developing countries,” stated LeCompte. “We support plans for a new IMF fund that can provide long-term loans to middle-income countries, which have been left out of the pandemic response to date.” 

Resiliency and Sustainability Trust can support a number of efforts including combating climate change.

"World leaders were clear at the IMF and G20 meetings that climate change will continue to cause significant economic shocks for countries," stated LeCompte.

The G20 pledged to do more on debt relief through the Common Framework it launched last year in response to the pandemic. The IMF announced an extension of debt payment relief for 24 countries through January 10, 2022. Additional relief may be extended to April 13, 2022, if the IMF's Catastrophe Containment and Relief Trust has resources. 

“Debt grew dramatically during the crisis and too many countries are not bringing in enough revenue to combat the pandemic,” added LeCompte. “Developing countries are concerned about their debt and coronavirus recovery as the G20 debt suspension ends and central banks are beginning to consider rate increases.”

Organized by Jubilee USA Network this weekend, more than a hundred organizations and faith communities are organizing G20 petition drives, hosting educational events and dedicating worship services for “Jubilee Weekend: A COVID Response that Shares Medicine, Ends Poverty and Protects our Planet.” Faith communities from Kentucky to Colorado and California to Georgia are calling on the G20 and IMF to provide additional aid and debt cancellation for developing countries to prevent future crises and protect people and planet. Around the world, the Asian Peoples' Movement on Debt and Development (Jubilee Asia Pacific) convened 100 plus global organizations to host actions and events through the end of October.

“The coronavirus already wiped out a decade of development, throwing millions of people into poverty,” stated LeCompte. “Faith and anti-poverty organizations are calling on world leaders to take immediate action on a pandemic response plan that increases aid and support for vulnerable countries.”

Read the list of groups and faith communities participating in "Jubilee Weekend: A COVID Response that Shares Medicine, Ends Poverty and Protects our Planet," here.

Read Jubilee USA's press statement on the IMF and World Bank Development Committee Communiqué here.

Read Jubilee USA's press statement on the International Monetary and Financial Committee Communiqué here.

Read Jubilee USA's press release on the IMF's World Economic Outlook and Global Financial Stability reports here. 

Read Jubilee USA's press statement on the G20 Finance Ministers Meeting here. 

IMF: Wealthy and Poor Countries Face COVID Economic Challenges

2021 Growth Projections Downgraded for United States

By Mahati Kalaparthy

The IMF World Economic Outlook report lowered economic growth projections for wealthy and poor countries. The IMF forecasts 5.9% global economic growth.

"What's most striking is that we are looking at economies declining both in wealthy and poor countries," said Eric LeCompte, the Executive Director of Jubilee USA Network. "Because the pandemic is impacting so many developing economies, the United States and other wealthy economies face supply shortages."

The IMF flagship report notes prolonged economic challenges while more than 96% of populations in low-income countries remain unvaccinated.

"The possibility of new COVID variants emerging is the biggest concern for the future of the global economy," added LeCompte. "Vaccines are a priority and proactive policies to deal with the global debt and health crises are essential for a return to sustainable economic growth."

Rising COVID infections and growing economic uncertainty are significant concerns according to a second IMF report released, the Global Financial Stability Report. The report warns of inflation concerns.

"Food prices are rising when too many countries struggle with economies in turmoil," shared LeCompte. "The highest food price increases are in countries where access to food is already a problem."

The IMF's stability report highlighted climate risks.

"One of the greatest threats to economic stability is the shocks that economies face due to climate change."

Read the Jubilee USA Statement on IMF World Economic Outlook Report here.

 

Read the Jubilee USA Statement on Global Financial Stability Report here.

 

Tax Agreement and Pandemic Debt Relief Move Forward

By Olivia Engling

Ahead of IMF and G20 meetings, new debt relief measures move forward and 136 countries finalized an agreement on a minimum corporate tax.

"In the face of the pandemic, we are seeing progress on corporate and digital taxes,” said Eric LeCompte, the Executive Director of Jubilee USA Network. "Questions remain on whether or not we can agree on a high enough tax rate and to what degree developing countries will benefit."

Members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting signed the “Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy." The agreement updates and finalizes a reform of tax rules proposed in July.

As poor countries struggle with revenue to confront the coronavirus crisis, the IMF announced it will extend debt payment relief for 24 countries through January 10, 2022. Additional relief may be extended to April 13, 2022, if the IMF's Catastrophe Containment and Relief Trust has resources.

"Expanding debt relief for the poorest countries is urgently needed,” stated LeCompte, a United Nations finance expert who worked on the IMF's debt relief trust. "The cancelled debt payments mean that needed funds can be directed to pandemic response."

Pandora Papers Reveal Financial Secrecy that Drains Resources from Poor Countries

By Mahati Kalaparthy

An investigation into more than 11 million private financial documents show hundreds of public officials in 90 nations using schemes to hide wealth offshore and avoid taxes. The International Consortium of Investigative Journalists released the Pandora Papers in partnership with the Washington Post and 600 journalists in 116 countries.

"The Pandora Papers provides a window into a secret world where the rich and famous can avoid paying taxes," noted Eric LeCompte, a United Nations finance expert and  Executive Director of the religious development group Jubilee USA. "Tax avoidance is part of the reason that too many countries lack the resources to fight the pandemic."

A trillion dollars leaves the developing world annually through crime, tax evasion and corruption. The leak shows how these monies increasingly land in accounts in the United States.

"Shell companies and tax havens enable corrupt politicians to steal resources from developing countries," stated LeCompte.

In January, Jubilee USA capped a decade of advocacy with the passage of the Corporate Transparency Act. The law requires the owners of US companies to disclose their true identities to the Treasury. In June, President Biden elevated the fight against corruption to a national security priority and mandated an inter-agency review to make recommendations.

“President Biden in on the right track as he pushes greater transparency in the global financial system,” shared LeCompte.

IMF Urges Wealthy Countries to Send COVID Aid to Poor Countries

By Mahati Kalaparthy

IMF Managing Director Kristalina Georgieva urged wealthy countries to donate IMF emergency COVID aid to developing countries. Her remarks opened an event organized by Jubilee USA Network in preparation for October IMF and G20 meetings.

“In August, the IMF created a type of emergency currency called Special Drawing Rights to help countries fight the COVID economic and health crises,” said Jubilee USA Executive Director Eric LeCompte. "Wealthy countries received more than $400 billion of the relief aid while developing countries received around $235 billion. Wealthy countries can't use the special currency and should donate it to poor countries being ravaged by the pandemic."

The IMF's Strategy, Policy and Review Department Director Ceyla Pazarbasioglu, former finance officials and development groups spoke at the event.

“Developing countries can use the emergency aid for healthcare, social programs and protecting the environment,” added LeCompte. 

In a letter sent to the G20 organized by Jubilee USA Network and Latindadd, 250 organizations propose guidelines for wealthy countries to donate their Special Drawing Rights to developing countries.

Read Jubilee USA's press release on the G20/IMF letter here.

Read the IMF/G20 letter here.

Read Jubilee USA's press release on the creation of Special Drawing Rights here.