Voluntary schemes cost lives in lower income countries – the UK must legislate to ensure private lenders cannot prioritise profits over people
Anneliese Dodds, Minister for International Development, delivered a speech at the London Stock Exchange, highlighting the role of the City of London and the private sector in leveraging funding for lower- and middle-income country growth.
Maria Finnerty, Lead Economist at CAFOD, commented on the Minister’s announcement, saying:
“We welcome the Minister’s focus on reforming international financial institutions, tackling unsustainable debt, and increasing access to financing for countries in the Global South. However, partnerships with financial firms cannot come at the expense of holding them to account.
Low-income countries are facing the worst global debt crisis in history, and today’s announcement falls short of the action needed to ensure that the private sector can’t hold out on debt relief. 61 per cent of global sovereign debt is owed to private lenders, who are free to refuse to participate in debt relief efforts even when other lenders agree. We’ve seen already that voluntary schemes for the private sector to partake in such negotiations aren’t working – simply calling on private lenders to take part isn’t enough.
The Minister is right to acknowledge that having such a high proportion of bonds issued under English Law, puts the UK in a strong position to act.
If the Government wants to show international leadership, in partnership with the global South, it must legislate to reduce incentives for predatory lending. Doing so will support communities around the world and protect the British taxpayer from bailing out unscrupulous private lenders.
In the UK, we have outlawed loan sharks: predatory lenders who make high-interest loans to vulnerable people. In Pope Francis’ Jubilee Year of 2025, aimed at tackling inequality and addressing injustice, millions living in the poorest and most climate-vulnerable countries deserve the same protection.
At CAFOD we hear first-hand from our partners the human impact of the debt crisis – cancer patients going without treatment, parents unable to feed their children, and an inability to respond effectively to the climate crisis. Meanwhile, private lenders are making hundreds of billions in profits from the interest they charge debt-distressed countries. Encouraging words are not enough – the UK Government must act.”
Notes to editors
Contact Rosalind Mayfield (rmayfield@cafod.org.uk, +44 (0)7856 799169) at the CAFOD Media Centre for more information or to request media interviews. Our latest statements as this story develops will be posted on X/Twitter and Bluesky.
Maria Finnerty is a political economist with a master’s degree in development economics from Cambridge. As CAFOD’s Lead Economist, Maria has a focus on global debt reform, climate finance, and economic inequality, championing solutions that prioritize human dignity and sustainable development for vulnerable communities worldwide.
CAFOD is the official aid agency of the Catholic Church in England and Wales, working with communities across Africa, Asia, the Middle East and Latin America to fight poverty and injustice, including those worst hit by climate change. Find out more:
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