Support debt cancellation
The economic shock caused by the coronavirus pandemic is already hitting the world’s poorest countries hard, and this is only set to get worse in the months and years ahead.
Many countries are being plunged into a new debt crisis as they respond to the threat of the virus while managing spiralling debt payments.
At the start of 2020, 34 countries were already in debt default or at high risk of being so. Even before the coronavirus crisis began, 64 developing countries were spending more on debt payments to other governments or institutions than healthcare.
Cancelling debt payments is the fastest way to keep money within countries, enabling them to:
- increase spending on healthcare
- provide a safety net to the most vulnerable people
- finance the rebuilding of their economies.
Pope Francis has spoken out recently on the injustice of debt, saying:
“It cannot be expected that the debts which have been contracted should be paid at the price of unbearable sacrifices. In such cases it is necessary to find … ways to lighten, defer or even cancel the debt.”
Speak out on the injustice of debt
The UK is a member of the G20 and a powerful shareholder of the International Monetary Fund and the World Bank. It has an important role to play in ensuring these global institutions act fast and avoid the pandemic causing lasting damage to the world’s poorest people.
Ahead of the July 2020 meeting of the finance ministers of G20 countries, CAFOD coordinated letters from over 70 faith leaders and nearly 90 MPs and peers from different parties calling on Chancellor Rishi Sunak to push for rapid debt cancellation.
Debt cancellation is a matter of justice for the world's poorest nations who are hardest hit by the economic fallout from Covid.— CAFOD (@CAFOD) July 16, 2020
Thank you to the 88 MPs & Lords who supported the Parliamentary Friends of CAFOD's call for the Chancellor to #CancelTheDebt at Saturday's #G20 meet https://t.co/dv9Nir20lm
Many CAFOD supporters added their voices to these calls by signing our petition and writing to their MPs.
Unfortunately, the G20 failed to make substantial progress and postponed decisions on areas such as debt relief or additional funding which would have given developing countries a financial lifeline.
Graham Gordon, Head of Policy at CAFOD, said:
“The lack of further progress on debt relief by the G20 is a kick in the teeth for those developing countries who are struggling to respond to the health and economic crises they face.
"The failure by G20 leaders to fully cancel the crippling debts owed to them and to secure agreement to cancel or suspend multilateral and private debt will put people’s lives and livelihoods at risk. It will undermine efforts towards any economic recovery - never mind a green recovery.
"It is incomprehensible that the G20 is not responding to the urgency of this unprecedented economic catastrophe. Debtor governments will continue to be forced to service debts when this is precisely the time they need to throw all the resources they can at their health systems and social protection to save lives.”
If you want to learn more on cancelling debt, use our briefing as a guide: