COVID-19: Global Lawmakers Call on IMF, World Bank to Cancel Debt of Poor Nations

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Bernie Sanders said the pandemic shows “that we have got to act as a global community — we truly are all in this together,” Jake Johnson reports. 

By Jake Johnson
Common Dreams

Sen. Bernie Sanders and Rep. Ilhan Omar led a group of more than 300 lawmakers from around the world last Wednesday in calling on political leaders and global financial organizations — including the International Monetary Fund and the World Bank — to fully cancel the debt that is shackling poor nations as they work to combat the coronavirus crisis and avert total economic devastation.

“This is a global economic and public health crisis unlike any we have seen in our lifetimes,” Omar, a Minnesota Democrat, said in a statement. “We as a global community must seize this opportunity to get relief to those who are suffering by cancelling debt for nations who cannot afford it. As the largest contributor to the IMF and the leading force behind the establishment of the World Bank, the United States should take the lead in this effort.”

Sanders, a senator from Vermont, warned that without sweeping relief, poor nations could be forced to “dedicate money that should be going towards protecting the health and safety of their people to pay off unsustainable debts.”

“We cannot allow these countries to be deprived of the resources they need to purchase food, medicine, protective gear, and medical equipment,” said Sanders. “The steps that our international coalition of lawmakers is proposing are not radical. It is the very least that these financial institutions should do to prevent an unimaginable increase in poverty, hunger, and disease that threatens hundreds of millions of people.”

The lawmakers’ letter (pdf) was sent Wednesday to World Bank president David Malpass and IMF managing director Kristalina Georgieva and also forwarded to world leaders, including U.S. President Donald Trump, U.K. Prime Minister Boris Johnson, and Canadian Prime Minister Justin Trudeau.

The letter’s demand for debt cancellation—not merely temporary suspension and deferment—for more than 70 International Development Association (IDA) countriesas well as an urgent infusion of financial support was backed by hundreds of lawmakers from more than two dozen nations, including Spain, Mexico, Brazil, Peru, France, Italy and Argentina.

“We call on all G-20 leaders through these [international financial institutions] to support the cancellation of debt obligations held by all IDA countries during this unprecedented pandemic,” the letter reads. “The vulnerable communities that lack the resources and privileges to adopt adequate public health measures will ultimately face the disproportionate burden of coronavirus.”

“We also urge you to support a major issuance of Special Drawing Rights (SDRs) in order to provide developing countries with urgent financial support,” the letter continues. “An issuance of SDRs on the order of trillions of dollars will be required to avert major increases in poverty, hunger and disease.”

As the Washington Post‘s Ishaan Tharoor wrote Wednesday, the coronavirus crisis “has underscored the stark depths of global inequality: Even before the pandemic hit, 64 countries spent more in servicing their debts to richer countries, multilateral organizations such as the IMF, and private lenders than they did on the healthcare of their own people.”

Sanders said Wednesday that the Covid-19 pandemic shows “that we have got to act as a global community—we truly are all in this together.”

“That means protecting the most vulnerable amongst us,” said Sanders.

Read the full letter below:

“Dear President Malpass and Managing Director Georgieva:

Members of Parliaments across the world are writing to request extensive debt forgiveness for International Development Association (IDA) countries by all major international financial institutions (IFIs) during this global COVID-19 crisis.

We are pleased to see that the World Bank Group (WBG) and International Monetary Fund (IMF) have already taken steps to implement debt relief and suspension for the world’s poorest countries. The recent IMF announcement of temporary debt relief funding for 25 member countries is an encouraging development but much more widespread and long term support is still needed.

That is why we call on all G-20 leaders through these IFIs to support the cancellation of debt obligations held by all IDA countries during this unprecedented pandemic. The temporary suspension and deferment of debt will not be sufficient to help these countries fully prioritize the prompt and sustainable management of the crisis at hand. The vulnerable communities that lack the resources and privileges to adopt adequate public health measures will ultimately face the disproportionate burden of coronavirus. Such harm means that global supply chains, financial markets, and other interconnected exchanges will continue to be disrupted and destabilized.

We also urge you to support a major issuance of Special Drawing Rights (SDRs) in order to provide developing countries with urgent financial support. The pandemic-triggered economic crisis is expected to be far more devastating than the global financial crisis of 2009, when SDRs were last deployed. We concur with Managing Director Georgieva’s “lower-end” estimate of $2.5 trillion for the current financial needs of developing countries. An issuance of SDRs on the order of trillions of dollars will be required to avert major increases in poverty, hunger and disease.

Therefore, not only do we have a humanitarian duty to aid our petitioning countries in dire need, but we also have a common, vested interest to support comprehensive relief for effective recovery and resiliency. As a collaborative international community, we can only begin to move past this pandemic once this pandemic ends for everyone.

For those reasons, we urge the WBG and IMG to take strong leadership to provide extensive debt relief and financial assistance for all impoverished nations most at risk of the devastating human costs and the long-lasting economic injuries of COVID-19. We ask that you work with relevant bilateral and multilateral partners to provide a response no more than 15 days after receipt of this letter.

It is in our shared public health, security, and economic interests that we come together and act boldly to assist the most vulnerable nations among us. We stand ready to work with you and support immediate and long-term solutions to ensure fragile, destitute countries receive the flexibility and guidance they need in order to prevent humanitarian crises, protect public health, and promote global stability during this crisis and well after it is over for affluent nations.”

Jake Johnson is a staff writer for Common Dreams. Follow him on Twitter: @johnsonjakep

This article is from Common Dreams.

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