The G7 Finance Ministers have today reaffirmed support for the Common Framework for debt treatments[1], but have not taken the necessary steps to tackle the growing global debt crisis.
Jerome Phelps of Jubilee Debt Campaign said:
“The G7 Finance Ministers have reaffirmed their support for the Common Framework, without announcing any new steps to make it actually work. Instead of plugging the gaping holes in the initiative, they have chosen empty words and good intentions, leaving countries facing unsustainable debt with few options to address this crisis.”
Responding to the announcement of a G7 Private Sector Working Group, Jerome Phelps of Jubilee Debt Campaign said:
“The proposal to involve private creditors in voluntary processes to improve future debt contracts fails to address today’s crisis of debts that are already unpayable. 52 countries are already in crisis, many of them middle income countries that are among the most exposed to the climate emergency but are excluded from debt relief schemes.[2] Private creditors have no reason to participate voluntarily in debt restructuring, since it is in their interests to be paid in full. The UK needs to pass legislation to ensure that private creditors cannot use British courts to sue defaulting poor countries for payment, potentially making profits of up to 250% interest.” [3]
Notes
[1] The Common Framework for debt treatments was announced by the G20 on 13 November 2020. The framework allows for rescheduling of debts to other governments. It allows for, but discourages, debt cancellation. The G20 agreement says debtors should “seek” the inclusion of private lenders in debt reschedulings on comparable terms but does not create any mechanism to guarantee this happens.
[2]https://debtjustice.org.uk/press-release/poor-country-debt-payments-soar-to-highest-level-since-2001
[3]https://debtjustice.org.uk/press-release/zambias-lenders-should-accept-large-debt-write-down
The Jubilee Debt Campaign is a UK charity working to end poverty caused by unjust debt through education, research and campaigning: https://www.jubileedebt.org.uk
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