FfD Forum 2019
Statement to Panel E: “Debt sustainability and systemic issues” on behalf of Civil Society FfD Group (including the Women’s Working Group on FfD)
Delivered by Eric LeCompte, Jubilee USA Network
18 April 2019
Thank-you Mr. Chair.
Today I speak on behalf of Jubilee USA, a coalition of more than 700 faith communities across the United States. Our founders and national members range from the US Conference of Catholic Bishops, the United Church of Christ, Protestant Mainline denominations, American Jewish World Service and Islamic Relief.
Jubilee USA seeks to protect and lift vulnerable communities across our world. Jubilee USA, the global Jubilee Movement, many of the leaders and governments in this room along with the leadership of President George Bush, moved forward debt relief policies that won more than 130 billion dollars in debt relief for the world’s poorest countries.
Together the polices that we won allowed more than 54 millions kids in SubSaharan Africa to attend school who never would have seen the inside of a classroom. Together, we forged the political will to ensure that debt relief, an effective form of accountable aid, would be invested in social infrastructure in the developing world.
Amidst such great progress, much of the world is facing debt risks, debt distress and some countries face debt crisis.
Recent reports from the International Monetary Fund and the United Nations Conference on Trade and Development warn of new emerging debt crises.
When we met together in 2015 and forged the Addis Ababa Action Agenda, 22% of the world’s countries were facing debt concerns, debt distress or debt crisis. As we meet today in 2019, that number has doubled and now 44% of our world faces debt concerns, debt distress or financial crisis. 40% of the world’s low-income countries face debt distress or debt crisis.
17 countries are now in default and unable to pay their loans or their debt.
While debt crises hurts a country and their population, wide spread debt crises can create the conditions for another global financial crisis.
Last week, the IMF released its two flagship reports warning of another potential global financial crisis, the World Economic Outlook Report and the Global Financial Stability Report. On Tuesday, the IMF released its World Economic Outlook Report warning governments that if they don’t tackle unsustainable debt and stop predatory risky behavior, we could be in store for another global financial crisis.
Last Wednesday, the IMF released its Global Financial Stability Report and made direct comparisons to the conditions that caused the 2008 global financial crisis and our economy now. In fact, the IMF directly compared the causal conditions of 2008 to now and analyzed sovereign debt levels, corporate debt levels and home values. The IMF is worried.
When we met and forged an agreement in 2015, we agreed on recommendations in the Addis Ababa Action Agreement to tackle financial crisis and debt crisis. Today I ask the panelists, the floor and UN Member States what we have done to formalize, implement and act upon the critical debt agreement we made together in Addis Ababa.
According to the Addis Ababa Action Agenda, we all made 4 specific commitments and I ask the floor what we have achieved regarding the actual implementation of these agreements.
1.) In 2015 we called for countries to pass national domestic legislation to stop the predatory behavior of so-called vulture funds. What progress have we made?
2.) In 2015 we called for the achievement of a global consensus on responsible lending and borrowing. Where are we on achieving a global legal framework on this? We expect responsible lending and borrowing frameworks to bring stability to our domestic economies, but these legal frameworks are still absent from our global economy.
3.) Similarly, we agreed upon improved debt restructuring processes based on domestic principles of lawful bankruptcy we enjoy in most of our domestic economies and that we rely upon for domestic economic stability. We agreed on improved debt restructuring processes that would be transparent, negotiated in good faith, neutrally arbitrated and be comprehensive. I ask the floor and the panel, where we are today?
4.) Finally, in the Addis Ababa Action Agenda we agreed that special protections should be granted for Small Island Developing States (SIDs) and the Caribbean region to ensure timely debt restructuring and sustainable financing. I ask the floor where we are today on this commitment.
These questions I ask about the commitments that we made together are urgent if we wish to finance the SDGs and prevent financial crisis.
Let us not forget that the financial crisis of 2008, according to the World Bank, pushed nearly 100 million people – mostly women and children – into extreme poverty.
I ask the panel and the floor, where are we in passing domestic legislation to stop vulture funds, where are we in implementing a global legal framework on responsible lending and borrowing, where are we in formalizing global debt restructuring in accordance with our domestic bankruptcy laws and where are we in improving debt restructuring and sustainable financing for the hurricane prone small islands and Caribbean countries across the region?
Thank-you Mr. Chair and panelists for considering my comments and questions.