The Jubilee Blog

G7 Leaders Pressed to Find Debt Crisis Solutions Amid Worrying Growth Forecasts

Ahead of Jubilee 2025 Year, Pope Francis is First Pope in History to Join G7 Summit

 G7 leaders grapple with debt, climate and development crises in Italy from June 13th - 15th. In addition to the presidents and prime ministers hosted in the southern Italian region of Puglia, others in attendance include Pope Francis, the leaders of Brazil, Argentina, India, other developing countries and heads of the IMF, World Bank and United Nations.

The World Bank forecasts low growth rates, which will not be enough for developing countries to achieve key development goals.

“Over three billion people live in countries that spend more on debt payments than they spend on health and education,” said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. “The pandemic, wars, climate challenges and high interest rates force many countries into hard choices between paying debts and investing in their people.”

In advance of the Jubilee year of 2025, for the first time in history a Pope, Pope Francis, joins the G7 meeting. Last week the Pontiff echoed words of Pope Saint John Paul II in 2000 saying that the Jubilee year is an appropriate occasion to cancel international debt and create new processes to solve debt and development crises.

“The G7 is under a lot of pressure to address growing debt challenges in Africa and among developing countries,” noted LeCompte who was with Pope Francis during his remarks on debt at the Vatican last week. “If we can't resolve debt problems and support countries to raise more revenue, poor global growth forecasts will continue.”

The G7 will consider ways to increase lending and aid through development banks. In May, G7 finance ministers noted that agreements made so far will yield more than $25 billion a year in additional finance for climate and other challenges. The largest provider of aid to the poorest countries, the International Development Association, needs substantial resources this year to maintain aid and loans with low interest rates.

“Together with G7 leaders, we won more than $130 billion in debt relief since Jubilee 2000,” shared LeCompte. “While we achieved significant debt relief and won anti-corruption policies, we failed to institute the policies we needed to prevent and resolve future debt crises. In Jubilee 2025, we must win real solutions to prevent debt crises and solve development challenges.” 

Read Pope Francis' June 5th Address on Debt Crises, Development and Jubilee 2025 here.

New York Senate Legislation Passes to Curb "Vulture" Fund Behavior

New York State Council of Churches, Jubilee USA Network, Oxfam and Partners In Health Issue Statement for Assembly to Pass and Governor to Sign "Champerty" Legislation and Urge Legislature to Pass Stronger Actions

A Senate bill (S5623) aimed at curbing predatory hedge fund behavior passed the New York Senate and is awaiting a vote in the Assembly (A5290) in order to head to Governor Kathy Hochul's desk to be signed into law.

"This legislation should become New York law as it addresses some of the ways that several hedge funds take advantage of developing countries," stated Eric LeCompte the Executive Director of Jubilee USA Network, an organization that works on debt and development policies. "This legislation is a step in the right direction. The legislature will need to take more comprehensive action to deal with all of the negative ways that New York's debt laws harm developing countries."

Advocates argue that more action is needed to improve New York laws that govern more than 50% of the world's private sector loans for countries.

The New York State Council of Churches, Jubilee USA Network, Oxfam and Partners In Health issue the following statement:

Thanks to Senator Krueger and Assemblymember Gonzalez-Rojas, their “champerty” bill (S5623/A5290) represents progress in limiting some of the worst, predatory behavior of the "vulture" hedge funds. As the bill (S5623) passed the Senate, the Assembly should pass the companion bill (A5290) and Governor Hochul should sign this legislation into law immediately.

Most effectively and importantly, the legislation reduces New York’s punitive prejudgment interest rate to a better level and places obstacles in the way of the most predatory speculators suing debtor countries in New York courts.

While this legislation is progress and may help curtail some predatory behavior, it does not deal with the greater concern for New Yorkers and developing countries of dealing with bad faith actors and hold-out behavior.

We support this champerty bill (S5623/A5290) and emphasize the importance of additional legislative action to address the larger issues where New York law harms developing economies.  A critical portion of champerty that would have addressed the larger problem of hold-out behavior and bad faith actors was removed under pressure from creditors.

Billions of people will suffer because creditors removed the good faith provision. The removed language would have ensured that all private creditors would be required to cooperate in qualified restructurings in good faith. Without this language, we lack protections for New York courts, New York taxpayers, poor countries, and official creditors like the United States government.

Legislators in New York have compelling public interest to pass additional legislation that can rectify the power imbalance in sovereign debt restructurings and can help solve these larger problems. While we celebrate progress and this victory with the Senate passage, New York legislators must continue their work to enact further comprehensive reforms such as those included in the Sovereign Debt Stability Act (S5542A/A2970) to ensure that all private creditors governed under New York laws operate responsibly.

 

New York State Council of Churches

Jubilee USA Network

Oxfam

Partners In Health

 

Read the Statement on the New York Senate Passage of the "Champerty" Bill (S5623/A5290) here.

Find the "Champerty" bill here.

View Jubilee USA's Sovereign Debt Stability Act (S5542A/A2970) webpage here.

Find the Sovereign Debt Stability Act bill here.