Demands for the debt payments of developing countries to be dropped this year have been raised by more than 100 global organizations. the list includes those countries that are among the poorest in the world are finding it almost impossible economically to deal with the health and economic impacts of the coronavirus pandemic.
Some of the largest charities of the world including Oxfam and ActionAid International are have called for providing debt relief which would free up more than $25bn in the current year itself. Demands for a range of debt relief measures have been made by these organizations in letters sent by them to world leaders as well as major central banks.
The United Kingdom based charity Jubilee Debt Campaign is spearheading the call for the debt relief and was made a day before a meeting of the G20 group of the world’s largest and fastest-growing economies.
“Developing countries are being hit by an unprecedented economic shock, and at the same time face an urgent health emergency,” said Sarah-Jayne Clifton, director of the Jubilee Debt Campaign. “The suspension on debt payments called for by the IMF and World Bank saves money now, but kicks the can down the road and avoids actually dealing with the problem of spiralling debts.”
The demand made by the campaigners is making immediate cancellation of debt payments including those that are owned by the poorer countries to private creditors.
“This is the fastest way to keep money in countries to use in responding to Covid-19, and to ensure public money is not wasted bailing out the profits of rich private speculators,” added Clifton.
The poorest 69 countries of the world are scheduled to make repayments of $19.5bn to other governments and multilateral institutions, and $6bn to external private lenders in total in the current year, showed calculations from non-profit network Eurodad.
While the World Bank has announced a response package for the most vulnerable economies worth $14bn, the International Monetary Fund (IMF) has opened up access to $50bn in funds for the purpose of emergency financing to such countries. IMF seeks to provide financial help top those countries that have a weak health system and use the funding available to help such countries to combat the epidemic. On the other hand, the money that has been apportioned by the World Bank will be aimed at supporting both the health and financial impact of the virus. These will include low-cost loans, grants and technical assistance.
The coronavirus pandemic had pushed the world into a recession, the IMF said in a blog on Monday. “For 2020 it will be worse than the global financial crisis. The economic damage is mounting across all countries, tracking the sharp rise in new infections and containment measures put in place by governments,” it said.
(Adapted from BBC.com)