As the finance ministers of the G20 group of rich countries meet on Wednesday, 14 October, an alliance of non-governmental organisations, comprising ONE, Oxfam and erlassjahr.de, is calling on the German government to lobby for an immediate stop to debt service payments by the world’s poorest countries.
“In many African countries, debt service payments take up more place in the budget than investments in education, health or social security. Not only do they lack the financial leeway to effectively tackle the corona crisis in their countries, but in the worst case, they are even threatened with national bankruptcy,” the NGO alliance said.
“We sound the alarm! The world’s poorest countries are in the middle of a liquidity and sometimes even a solvency crisis. They simply have no money to finance anti-corona measures on the ground. This is an insanity that we can put an end to,” ONE, Oxfam and erlassjahr.de urgently appealed to German Finance Minister Olaf Scholz.
“So that the affected countries can breathe again,” the NGOs called on the minister to work for an international freeze on debt repayments during the 4th G20 Finance Ministers and Central Bank Governors (FMCBG) Meeting, holding virtually on Wednesday to discuss global economic development and support a swift and sustained global economic recovery.
Moreover, the NGO alliance demands that the G20 countries and the International Monetary Fund extend their current debt moratorium, which expires at the end of the year, until the end of the pandemic. In addition, the World Bank and private creditors should also join to relieve poorer countries.
“All creditors must pull together. A total of 19 African countries are on the verge of insolvency or are already in the middle of it,” the organisations said in the petition, which has been signed by more than 820,000 people.
A growing number of African countries, some already in humanitarian crisis, will soon have to choose between servicing their debts or helping their most vulnerable citizens, as even the World Bank and the International Monetary Fund are warning of the looming debt crisis. In September, the Zambian government requested debt service relief from its commercial creditors and a six-month interest payment delay on its Eurobonds due in 2022, 2024 and 2027. Consequently, Zambia is set to become the first African country to default on its private debt since the Covid-19 pandemic broke out.
The 76 countries with the lowest incomes owe at least $573 billion in debt and are due to pay about $41 billion to service those debts in 2020, according to ONE. The debt repayment obligations is compounded by rising government expenditure, dwindling tax revenues and falling remittances.
Development economists say the impacts of COVID-19 and the global recession threaten to push 150 million people into extreme poverty.
World Bank chief David Malpass has warned that if the crisis is unchecked, the impact of the recession could threaten social order and democracy in many of the affected countries, adding that “enormous budget deficits and debt payments” are “overwhelming” some countries.
ONE is an international movement which is committed to advocating for an end to extreme poverty and preventable disease by 2030 “so that every person can live a life of dignity and full of opportunities”. The organisation puts pressure on governments to do more to fight extreme poverty and preventable diseases, especially in Africa. More information is available at www.one.org.
Oxfam is an international relief and development organisation that mobilises people around the world to overcome poverty through their own efforts. The Oxfam network consists of 20 Oxfam organisations working side by side with around 3,800 local partners in more than 90 countries. More at www.oxfam.de
erlassjahr.de: The German debt relief alliance “erlassjahr.de – Entwicklung braucht Entschuldung e. V.” is committed to ensuring that the living conditions of people in indebted countries are given more importance than the repayment of national debts. erlassjahr.de is currently supported by over 600 organisations from the church, politics and civil society nationwide and is integrated into a worldwide network of national and regional debt relief initiatives. More information is available at www.erlassjahr.de.