G20 fails to release developing world from ‘debtors prison’, despite suspension

G20 fails to release developing world from ‘debtors prison’, despite suspension

Date: 14 October 2020

Warning that benefits of debt suspension will flow into coffers of big banks without stronger action

Reacting to the G20 finance minister’s communique, Nick Dearden, director of Global Justice Now, said:

“The G20 are waking up to the fact that many countries have been confined to a debtors’ prison by coronavirus, but they need to do more than suspend their sentence. Rather, they should be tearing down the walls.

“That means cancelling large quantities of debt, forcing the banks to take part too, and using their power at the IMF and World Bank to bring them into the mix as well. Above all, it means changing the wild west system of debt restructuring so that countries in debt crisis can get fast, fair and full treatment.

“The ‘common framework’ in today’s communique could be a stepping stone to a more comprehensive solution to the deepening global debt crisis, but it will need to acknowledge the role of reckless lending and the need to go beyond voluntary measures for the private sector to be a success. People across the global south understand only too well the glaring injustices of the international debt system; an unfair system that Covid-19 has exacerbated to breaking point. The campaign for serious action for debt justice continues.”

Global Justice Now today co-released new research showing that major private institutions including Blackrock, HSBC and Goldman Sachs stand to receive $13 billion in debt payments from lower-income countries in 2020 alone.

Countries including Ghana, Kenya, Nigeria, Senegal and Zambia face substantial payments to private creditors which are not covered by the debt suspension announced by the G20 today. Without private sector participation, the benefits of the 6-12 month suspension are likely to flow straight to some of the wealthiest financial institutions in the world. See https://www.globaljustice.org.uk/news/2020/oct/14/banks-and-hedge-funds-slammed-draining-poorer-countries-funds-during-pandemic