Sovereign Debt for Low Income Countries Must Be Cancelled to Tackle Coronavirus Crisis, Say Australian CSOs
Emergency finance must not add to debt burdens
Process to reduce debts to sustainable level in future also needed
Media Release April 8, 2020: A group of Australian civil society organisations (CSOs) released a statement today calling for the Australian Government to support the cancellation of external debt payments in 2020 for Low Income Countries to help them fight the coronavirus.
Organisations who signed onto the statement include: Jubilee Australia, Action Aid Australia, Caritas Australia, AID/WATCH, Union Aid Abroad-APHEDA and The Australian Fair Trade and Investment Network (AFTINET).
The letter called for the Australian government to use its influence at the G20 and at the IMF to push for:
- The permanent cancellation of all bilateral, multilateral and private debt due in 2020 for vulnerable countries, with no accrual of interest and charges and no penalties.
- The provision of additional, fresh emergency finance, given as grants not loans, that does not create more debt. The statement said that an additional US$ 73.1 billion of emergency grants will be needed to help low income economies as they respond to the crisis in 2020.
- A process under UN auspices to be agreed in the longer term, to support systematic, timely, and fair restructuring of sovereign debt.
The Australian CSO letter has happened in concert with the publication of an international petition from more than 100 organisations across the globe calling for the cancellation of the sovereign debts of LICs to fight the Covid-19 health and economic crisis.
The cancellation of debt repayments is estimated to free up US$ 25.5 billion to fight coronavirus in 2020 alone. Extending the cancellation to apply to payments due in 2021 would make another US$ 24.9 billion available to help save lives now and in the future.
The statement was sent to Finance Minister Mathias Cormann, the Australian Executive Director at the IMF and the Australian Alternate Executive Director at the World Bank.
Lidy Nacpil, Coordinator of the Asian People’s Movement on Debt and Development, said: “Hundreds of millions of people in the world’s most impoverished countries are facing devastating health, social and economic crises as a result of the COVID-19 pandemic. Permanently cancelling debt payments from by these countries would be the fastest way to free up existing public resources to tackle this unprecedented crisis and to save lives.
Dr Luke Fletcher, Executive Director of Jubilee Australia, said: "Australia has an important and influential voice on these questions by virtue of its status as a G20 country, as a member of the Paris Club of creditor nations, and as an influential voice at the IMF and the World Bank. It must use this voice to advocate for a clear outcome on debt cancellation at the IMF/World Bank Annual Meetings next week".
Dr Fletcher continued: "Many of our Pacific neighbours, who are already bearing the brunt of the impacts of climate change, are at risk of debt distress and will also be particularly vulnerable to the COVID-19 crisis. Australia has a responsibility to protect our Pacific neighbours by making sure that the international community comes up with a clear agreement on debt cancellation".