THE International Development Select Committee of the UK Parliament has published a report on the impacts of Covid-19 in developing countries.
The report urges the Government to extend the G20’s Debt Service Suspension Initiative beyond June 2021 and to use its influence to persuade private lenders to join this scheme. It also calls on the Government to consider options for the cancellation of debt for low- and middle-income countries.
Reacting to the report, Sarah-Jayne Clifton, Director of Jubilee Debt Campaign said: “Covid-19 has accelerated and deepened the global South debt crisis. Developing countries are spending $92 million dollars a day on debt payments, money which they desperately need to fight the pandemic. The IDC report released today is timely and necessary. It shows that healthcare in some countries is grinding to a halt, and that more must be done to cancel the debts of developing countries.
“The UK government is uniquely placed to take action on this issue as hosts of the G7 this year. The government must use this moment to unlock multilateral action to tackle the Covid-19 debt crisis, and most importantly take action to ensure cancellation of debt owed to private lenders. It’s already clear that private lenders won’t cancel debts when they are asked to do so voluntarily. The UK and other rich countries need to go further and require the private sector to do their fair share in multilateral debt relief, and to put legal protections in place for developing countries in case the private sector fails to comply.”
The UK finance sector and legal system play a key role in the global sovereign debt regime, with 45 per cent of all outstanding international sovereign bonds governed by English law, and 90 per cent of African government bonds.
Jubilee Debt Campaign is calling on the government to use its G7 leadership to push for the mandatory inclusion of private lenders in the G20’s new Common Framework, which aims to help tackle the Covid-19 debt crisis in developing countries. The campaign group is also calling on the government to consider updating the 2010 Debt relief (Developing Countries) Act to help support the implementation of the framework. New legal protections are needed here in the UK so that any developing country which owes debts under UK law and has to stop debt payments due to the crisis is protected from being sued by private lenders who fail to offer debt relief.
* Read the report Covid-19 in developing countries: secondary impacts here.
* Source: Jubilee Debt Campaign