Financial giants are trapping countries in unjust debt which is destroying lives. A new UK law could change that.
We’re facing the worst global debt crisis in twenty-five years. People in countries like Ghana and Sri Lanka are being robbed of an education and healthcare, their governments unable to deal with the climate emergency because greedy private lenders are dragging out debt negotiations.
Here’s a briefing on what this law could look like and how you can help.
Private lenders put profit before people – without laws to make them cancel debt, they’re free to drag their feet and make unfair demands. Their actions are prolonging the debt crisis – and it’s ordinary people who suffer.
We have a new government, with a big majority and a strong mandate to act. Thanks to incredible campaigning by Debt Justice supporters and others, Labour’s election manifesto included a commitment to ‘tackling unsustainable debt’ in lower-income countries.
This is a critical time for us to stand in solidarity with campaigners in affected countries and push the UK government to act on their promise by supporting a debt justice law. Action here could help get debt cancelled in countries in crisis – because 90% of lower-income country debts owed to private lenders are overseen by UK law.
And never has the need been more urgent – right now, 54 countries are in debt crisis and debt repayments are at their highest levels in 30 years. Ghana has paid over $7 billion in interest alone on debts to western lenders since 2010. Financial giants like BlackRock – the largest investment company in the world – are dragging out negotiations in the hope of more profit. They’re worsening the debt crisis and ruining people’s lives.
In the words of Ghanaian debt campaigner Bernard Anaba:
“The debt crisis has led to a higher cost of living, escalating food prices, high cost of transportation, high cost of water and electricity, and making life very difficult for people. People barely get two meals a day… lives are being destroyed because of the debt crisis.”
Across countries in debt crisis, people are resisting – taking to the streets, organising strikes and demanding an end to the unjust debt. It’s time for the government to commit to genuine change that will deliver justice for the lower –income countries trapped in debt. Together we can help win justice for millions of people living in countries in debt crisis.
Countries in crisis have struggled to get debt cancelled because private lenders have been refusing to agree to the same terms as other lenders. Instead, these financial giants have been dragging out negotiations as they hold out for big profits – at the expense of millions of people living in countries in debt crisis.
90% of the debts owed to financial giants by lower-income countries are overseen by UK law, this means parliament could pass a debt justice law that would force private lenders to take part in debt cancellation.
This law could:
- Make sure that no private lender could sue a country for more than they would have got if they had taken part in debt restructuring through existing agreements
- Allow the courts to force private lenders to take part in debt cancellation if other lenders, like governments, have agreed to it.
The other place which governs debt contracts is New York. The New York Assembly is already considering bills that aim to achieve the same outcomes as a debt justice law in the UK. We are working closely with campaigners in New York to push for reforms that would win justice for all countries in debt crisis.
Governments can borrow from various types of lenders – private lenders like hedge funds, asset managers, banks and oil traders; multilateral creditors like the International Monetary Fund and the World Bank; and other governments.
Private lenders make up by far the biggest portion (46%) of projected debt repayments between now and 2029. These financial giants – like BlackRock, HSBC, JP Morgan, and UBS – continue to demand debt repayments from lower-income countries in debt crisis.
At the time of the last major global debt crisis in the 1990s and early 2000s, millions of people around the world demanded action on debt. In 2005, after years of tireless campaigning, debt campaigners won a new debt relief scheme which led to $130 billion of debt being cancelled by multilateral and government lenders for 36 countries. This was a clear demonstration that international powers can take action on unjust debt when under enough pressure to do so.
But private companies were excluded, so in 2010 Debt Justice won a law which made private lenders with debts governed by UK law take part in the debt cancellation scheme. However, that debt cancellation scheme has now come to an end – we need a new law to make private lenders take part in all internationally agreed debt relief to address today’s debt crisis and help prevent future ones.
