The Jubilee Blog

Hundreds of Billions in New Lending on the Table at Cote d’Ivoire Gathering

World Development Banks Meet for Third Annual Summit

World leaders and more than 450 development banks meet for two days on aligning loans with crisis recovery and tackling environmental challenges. The third yearly Finance in Common Summit takes place in Abidjan, Cote d’Ivoire, amidst a world economy facing multiple shocks and calls for increasing lending capacity for development banks.

“What distinguishes this third Finance in Common from the two previous ones, is that now there are proposals to push development banks to do more,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. “Development banks play an important role in crises. With the pandemic, Ukraine war, inflation, food prices and climate challenges, we will demand more of them.”

In July, a G20-established panel of experts proposed changes to the way banks determine loan risk, assess available capital, and communicate with credit rating agencies. Frannie Léautier, Senior Partner at SouthBridge Group and CEO of SouthBridge Investments, chaired the group, comprising fourteen experts from a variety of backgrounds. According to the panel, global development banks can lend hundreds of billions more to poor countries. G20 officials met on the proposals last week.

“The report shows a pathway to expand development bank lending dramatically,” noted LeCompte who tracks G20 policies.

Earlier this month, Treasury Secretary Janet Yellen called for multilateral development banks to devise new approaches to respond to global challenges.

“Development banks require reforms of their operations, practices and lending models in order to deal effectively with the current crises,” stated LeCompte.

African Catholic bishops and religious leaders met in Accra, Ghana, last month and asserted that development banks can use more capital to provide loans in times of crisis, but they lack the resources to meet 21st century challenges. In a letter to President Biden early last year, Jubilee USA Network and the US Conference of Catholic Bishops called for significantly increasing multilateral development banks lending volumes, through a mix of increasing and improving use of capital. A similar letter was sent with more than 200 religious groups echoing the need for boosting development bank capacity.

The G20 is working on processes for wealthy countries to disburse some of their pandemic emergency currency, or Special Drawing Rights to poor countries. The IMF created $650 billion in SDRs, to help countries respond to the pandemic, of which advanced economies received more than $400 billion. This month, the IMF initiated operations for a new lending window, the Resilience and Sustainability Trust, that will fund its loans with Special Drawing Rights aid that wealthy countries share.

“We need to find ways to get more funding for development banks,” shared LeCompte. “Special Drawing Rights donations from wealthy countries to development banks can help us narrow the current funding gap."

Read Jubilee USA and the US Conference of Catholic Bishops' letter to President Biden here.

Read the African Catholic Bishops and religious leader statement here.

Read 'The Independent Review of MDBS Capital Adequacy: Boosting MDBs’ Investing Capacity' here. 

Read Secretary of the Treasury Janet L. Yellen's remarks here.

Find the Finance in Common webpage here.

Ahead of Annual IMF and World Bank Meetings, IMF Forecasts Lower Growth

Continuing War, Pandemic, Inflation Drive Up Fears of Global Recession

As world leaders arrive for G7, G20, IMF and World Bank Meetings, the IMF downgraded economic growth to 2.7%. As the global economy grapples with the Ukraine war, pandemic, a food crisis and inflation, the IMF warns of recession in two reports.

"It seems likely that we are heading into a recession,” said Eric LeCompte, the Executive Director of the development organization Jubilee USA Network. "The US and other large economies will see contractions and this impacts the entire global economy.”

The released flagship IMF World Economic Outlook report considers that rising interest rates could trigger more debt crises in developing countries. 

"As the dollar gets stronger, developing country debts become dangerously unsustainable,” added LeCompte. "The war and rising interest rates are putting developing countries in an even more difficult situation."

In its Global Financial Stability Report, the IMF stated that the persistence of inflation is a challenge the world economy has not faced in decades.

"The combination of high inflation and recession deeply affects the poor,” stated LeCompte. "Some of the proposed solutions of austerity and higher interest rates will cause pain."

In a chapter devoted to climate finance, the report indicated that developing countries will need $300 billion a year just to adapt to the impacts of climate change, a figure that may grow larger by 2050.

"We need to protect our planet and we need to limit the economic losses posed by climate change," shared LeCompte.

On Wednesday, G7 and African finance ministers meet and on Thursday, G20 finance ministers. The IMF and World Bank main policymaking bodies meet on Friday.

Read the full World Economic Outlook Report here.

Read the full Global Financial Stability Report here.

Read Jubilee USA's statement on the IMF World Economic Outlook report here.

Read Jubilee USA's statement on the Global Financial Stability Report here.

Read Jubilee USA's press release on IMF chief Kristalina Georgieva's curtain-raiser speech here. 

Read Jubilee USA's press release on the IMF Food Shock Window here.

Find Jubilee USA's full list of this week's events here.

Find Jubilee USA's October 14th and 15th interfaith vigil, press conference and teach-in details here.

IMF Predicts Global Economy to Lose $4 Trillion

"Senseless War," Pandemic and Inflation Threaten Economy, Warns IMF Chief Ahead of World Leader Meetings

The global economy is more fragile noted IMF Managing Director Kristalina Georgieva. In her curtain-raiser speech ahead of the IMF and World Bank Annual Meetings, Georgieva predicted a $4 trillion global loss through 2026.

“Most of us already feel like we are experiencing a recession," said Eric LeCompte the Executive Director of Jubilee USA Network who has monitored IMF policy since 2010. “Before the pandemic, most of the world's countries were facing economic crises. Since the pandemic, we had three years of crisis after crisis and the world is facing recession."

According to Georgieva, growing debt vulnerabilities in emerging developing economies and more than 60% of low-income countries raise the risk of a widening debt crisis that harms populations and global growth. The IMF chief urged a quicker implementation of a G20 debt relief process known as the Common Framework for Debt Treatments Beyond the Debt Service Suspension Initiative.

“Debt relief processes are moving too slow,” stated LeCompte, a United Nations finance expert. "The debt relief processes that we have don't even cover all of the countries in dire need of relief."

Referring to food insecurity that now affects more than 345 million people worldwide, Georgieva said that a food emergency financing window that the IMF unveiled last week will help the most affected countries.

“The IMF acted rapidly to support countries facing rapidly rising food bills, but we should not forget these are still loans for countries facing too much debt,” stated LeCompte. 

Watch the curtain-raiser speech here.

Read Jubilee USA's press release on the IMF Food Shock Window here.

Find Jubilee USA's full list of upcoming events here.

African Bishops Call for Debt Relief and Aid to Address Multiple Crises

Statement Precedes G7, African Finance Ministers and IMF Washington Meetings

G7 and African finance leaders should work together to remove the heavy burdens of debts in Africa, Catholic bishops and other faith leaders from the region said in Accra, Ghana, at the end of a two-day meeting. Representing churches in Cameroon, Cote d’Ivoire, Kenya, Ghana, Liberia, Nigeria, Senegal, Togo and South Africa, the dignitaries discussed the effects and responses to the pandemic, Russia-Ukraine war, food inflation and rising interest rates shocks in Africa.

“Less than three years after the biggest global recession in a century, the threat of recession looms again,” the bishops said. “Budget shortfalls and unpayable debts have reduced the room for our countries to take the actions needed to protect the most vulnerable and restore prosperity.”

On October 12th, G7 and African finance ministers will meet on the sidelines of the IMF/World Bank Annual Meetings in Washington DC. Debt, aid and future solutions for debt crises will be on the agenda.

"Africa's religious leaders see the suffering of their people and are calling on world leaders to provide the debt relief and aid needed to fight high food costs and the shocks from the pandemic," shared Eric LeCompte the Executive Director of the religious development group Jubilee USA Network. Jubilee USA works with faith leaders on pandemic and crisis response. "If we are to address global poverty, we need to address the debt and economic structures that are causing poverty around the world."

The African prelates recalled Popes John Paul II and Francis’ support for debt relief and asked for debt relief assessments to enshrine the principle that human development and climate investments come before debt payments.

“G7 countries, as key debt governing jurisdictions, should pass domestic legislations that prevent private creditor litigation from undermining international debt relief efforts,” added the bishops.

Under legislation currently before the New York State Assembly, private creditors would have to join international debt relief deals signed by public creditors. Jubilee USA supports the legislation, and is working with counterparts in key G7 jurisdictions to implement similar initiatives.

The faith leaders also highlighted the importance of the $650 billion in Special Drawing Rights – an emergency currency the IMF creates – released last year for pandemic crisis relief. They called on rich countries to transfer a significant portion of their share of SDRs to African countries.

“We want to highlight the enormous potential in [the] region of rechanneling through the African Development Bank,” faith leaders said.

The African Development Bank is one of the lenders seeking to fund new loans to its members with rich-country SDR contributions. The G20 committed to a global objective of $100 billion rich-country SDRs to countries in need.

Read the full African Catholic Bishops and religious leader statement here.