NEWSLETTER

As we gear up for the Spring Meetings of the International Monetary Fund (IMF) and the World Bank (WB), scheduled from April 15-21 in Washington DC, the conversation around crippling debt burdens is taking center stage. These meetings bring together governments, multilateral and bilateral lenders, and various institutions to discuss the challenges facing the global financial architecture. However, amidst these discussions, a critical issue often overlooked by the mainstream is gaining momentum: the global movement advocating for debt cancellation, particularly for Global South countries.

The Impact of Debt on a Global Scale

As the ESCR-Net Economic Policy Working Group alerts in a recent article, the scale of the debt crisis is staggering. According to the United Nations Conference on Trade and Development (UNCTAD), nearly half of humanity, approximately 3.3 billion people, live in countries where debt interest payments surpass allocations for education, health, and social security. The burden of debt goes beyond financial constraints; it leads to austerity measures imposed by International Financial Institutions (IFIs), particularly the IMF and World Bank, further exacerbating inequalities and disproportionately affecting marginalized and impoverished communities.

“Heavily indebted countries, already grappling with the repercussions of COVID-19, rising food and energy costs, and economic slowdown, found themselves forced to divert public spending, notably slashing wages and social expenditures, to prioritize debt repayments,” argue the co-authors of the article.

The upcoming Spring Meetings present a strategic opportunity to address the multifaceted challenges posed by the debt crisis. Civil society groups will play a crucial role in advocating for alternative voices and highlighting the impact of illegitimate debt burdens on communities worldwide. The growing global movement against debt is calling for a reevaluation of neoliberal economic policies and a shift towards alternatives that prioritize people and the planet.

On April 16, 2024, ESCR-Net and Essex University Human Rights Clinic will launch the research report titled "A Human Rights-Based Approach to Debt and Climate Justice" during an online event. The report delves into the modern international debt architecture shaped by neoliberal policies, prioritizing profit over people and the planet. As the authors point out, “Initially, sovereign debt was used by colonizing nations as a tool to secure capital for the building and maintenance of their colonial empires. Over time, Western states and institutions have developed the sovereign debt model into the multitrillion, multinational, and multicurrency network of debt instruments that we see today.”

The report also emphasizes the necessity to address the nexus between climate and debt. Although climate change is a global issue with global consequences, numerous Global South countries suffer the most severe impacts despite having contributed the least to climate change. Thus, climate-vulnerable countries spend more money on fulfilling their debt repayment obligations than investing in climate mitigation and adaptation measures.

The online event, which will be held with simultaneous translation in English, Arabic, and Spanish, will feature speakers exploring and unpacking the intersection of debt and colonialism, corporate capture and the impacts on human rights and the climate crisis.

Coinciding with the IMF/WB Annual meetings held in Marrakech, Morocco in October last year, several ESCR-Net members engaged in the Global Counter Summit of Social Movements to amplify our demands for debt justice:

The roots of the current global debt crisis go deeper than just financial transactions. Where colonialism ended, imperialism was set up to continue the exploitation of resources for the benefit of corporate and economic elites.

Members of the Economic Policy and the Corporate Accountability Working Groups worked on the background document "The Intersection of Debt and Corporate Capture" to deepen our political analysis and collective understanding of the interconnection of corporate capture as a driver of the debt crisis. It reveals that corporate influence leads to policies favoring private creditors over public welfare. For instance, Argentina's debt restructuring amid the COVID-19 pandemic lacked substantial relief; "Vulture" hedge funds exploit distressed sovereign debt, exacerbating crises in countries like Zambia and Lebanon; Public-private partnerships (PPPs) create hidden liabilities for governments, as seen in Uganda's case, where multinational corporations benefit from government guarantees. The report highlights the need for comprehensive reforms to ensure fair burden-sharing and sustainable debt management practices.

>> Download "The Intersection of Debt and Corporate Capture" in English, Spanish, French, Arabic.

In June 2023, 30 of our members gathered in Argentina in the workshop entitled “Centering Care, Advancing Debt Justice.” As our members highlighted, the COVID-19 pandemic triggered a new debt crisis. Governments burdened by existing sovereign debt were unable to provide sufficient support due to financial constraints and harmful austerity measures imposed by lenders. Essential services such as healthcare, education, and housing suffered, disproportionately affecting marginalized communities. These essential activities are mainly carried out by women and were done precariously in conditions and with the lowest salaries. At the household level, there was a growing burden on domestic and reproductive care, disproportionately impacting women and pushing many into personal debt in order to care for their families and communities.

During the workshop, members began to articulate a collective vision for an economy of care that is centered on principles of care, cooperation, and solidarity. Members will keep amplifying in key advocacy spaces this collective vision that is necessarily connected to debt. Thus, during the recent 68th session of the Commission of the Status of Women celebrated in March in New York, and that this year focused on gender finance, our member Mae Buenaventura, of the Asian Peoples' Movement on Debt & Development (APMDD), highlighted, “it rang clear in many sessions that the call for debt cancellation is very much alive and well in feminist agendas everywhere, and that breaking the chains of debt is a key fight we will not shirk from, to fulfill our rights and move us closer to our emancipation.”