Campaigners rally behind Argentina as financial markets refuse to accept coronavirus debt write-down

Global Justice Now called on the British Government to support Argentina in its stand-off with its private sector lenders, ahead of the country’s formal default deadline on Friday. If Argentina goes into default, it is likely to be the first of many countries, as enormous debt burdens prevent government dealing with the coronavirus crisis across Africa, Asia and Latin America.

Campaigners claim it is unconscionable that governments are being forced to put the demands of financial markets ahead of spending on the health emergency, the protection of jobs and economic rebuilding, and called for support for a new international mechanism to force private creditors to accept debt write-downs.

Argentina has been engaged in talks to restructure its debt for the past month, and has put forward a proposal described as “responsible” by a large group of economists including Joseph Stiglitz and Jeffrey Sachs(1). The country has been commended for its humane response to coronavirus. But while some creditors have accepted the proposal, others are ‘holding out’, potentially looking to sue Argentina in foreign courts at a later date. The case has attracted special attention because so many countries face unpayable debt burdens, and if private sector creditors refuse debt writes-downs, debt relief granted by richer countries and public bodies could be diverted into the coffers of financial institutions.

“Anyone who believes the primary task of a government is to protect and meet the needs of its people must stand with Argentina at this time. The country is being bullied, not for the first time, by irresponsible financiers intent on rejecting a very reasonable debt restructure which would allow Argentina to meet its obligations to its people. Governments must not put the demands of creditors ahead of public need, especially during a public health emergency.

“What Argentina is going through today could be mirrored around the world tomorrow, as many countries face unpayable debt burdens, created off the back of a reckless lending splurge. They will be told to institute austerity to please the markets, and to divert debt relief into the coffers of financial institutions. Ultimately we have a broken financial system, and coronavirus had exposed this once again. It’s time to bring into being a new system which can compel the private sector to write down debts where necessary, as proposed by the UN. But it will take governments like Argentina to stand up for their rights if we’re ever to create the momentum necessary to bring that system into being.”

1. https://www.reuters.com/article/argentina-bonds-economists/nobelist-stiglitz-economists-from-20-countries-back-argentina-in-debt-showdown-idUSL1N2CO0C9

2. Global Justice Now is part of a global campaign for emergency debt cancellation to help countries in the global south deal with coronavirus. See https://www.globaljustice.org.uk/news/2020/apr/14/coronavirus-imf-told-massively-scale-debt-cancellation-developing-world

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Photo: ‘No to the payment of the external debt’ protest in Buenos Aires during a previous debt crisis in Argentina in 2010. Credit: Xomiele/Flickr