NEW FIGURES SHOW that UK-based banks are the largest owners of poor country debt.

Of the 73 countries eligible for the debt relief initiative put in place by the G20 in response to Covid, 30 per cent of their debt owed to private lenders is owed to companies in the UK. This is in contrast to 18 per cent owed to Chinese private lenders and seven per cent to US companies, the second and third highest countries on the list.

So far, Chad, Ethiopia and Zambia have applied for the G20’s new framework for debt restructuring:. The majority of the debt payments of these three countries are to private lenders, and 33 per cent of their debt to private lenders is owed to UK companies, 23 per cent to Chinese companies and 15 per cent to US companies.

The figures are for debts other thans bonds owed to private lenders, as the World Bank does not provide residency data for bond owners. However, previous Jubilee Debt Campaign research has shown that 90 per cent of bonds owed by countries eligible for the G20 initiatives are governed by English law. A full 100 per cent of Ethiopia and Zambia’s international bonds are governed by English law, while Chad does not owe any debt as bonds.

The G20 has called on private lenders to voluntarily take part in its debt suspension scheme, but so far no private lenders have complied with the request. The new figures show that it is UK-based lenders which are profiting the most from the failure of private lenders to take part in debt suspension.

Tim Jones, Head of Policy at Jubilee Debt Campaign, said: “It is unfair for private lenders to keep being paid in full when other lenders have suspended debt payments. Lower income countries are spending $144 million dollars a day on debt payments. Private lenders need to be made to comply with international debt relief efforts so that poor countries have the resources they need to tackle and recover from the Covid crisis, and so that further multilateral action on debt relief can be unlocked. As the country in the world with the greatest responsibility for private lenders, the UK must use its presidency of the G7 this year to unblock private participation in debt relief.”

The President of the World Bank, David Malpass, has called on the UK and New York to pass legislation to make debt restructuring easier, and legislation is being introduced in New York to do so. Jubilee Debt Campaign has been joined by other charities including Christian Aid, Cafod, Oxfam and Global Justice Now in calling for legislation in the UK and New York to make private lenders comply with international debt relief efforts. There is precedent for similar action in the 2010 UK Debt Relief (Developing Countries) Act, which made private lenders comply with the Heavily Indebted Poor Countries debt relief initiative.

Jubilee Debt Campaign has calculated that in 2020, developing country debt payments reached the highest level since 2001, increasing by 115 per cent from 6.7 per cent of government revenue in 2010 to 14.3 per cent in 2020. When the Covid crisis began, 64 countries were spending more on external debt payments than on healthcare.

* Source: Jubilee Debt Campaign

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