Springing the debt trap

Ahead of the International Day for the Eradication of Poverty (October 17), more than 140 senior leaders of Christian churches from around the world have signed a letter urging the International Monetary Fund (IMF) and the World Bank to cancel the debts of developing countries  fighting the coronavirus pandemic.

Signed by religious leaders from different denominations, including several in Canada, the letter was sent ahead of the annual meetings of the World Bank and IMF in mid-October 2020. Debt relief is on those meetings’ agendas, as part of the global economic recovery from the pandemic.

That debt relief is becoming a mainstream idea is evinced by the G20 group’s October 14 announcement of a moratorium on debt repayments by eligible devloping countries until June 2021, with the possiblility of a further six-month extension to be reviewed next spring.

The coronavirus pandemic is the worst global health crisis in a century. Yet, many countries are being forced to choose between spending money on saving lives and continuing to pay their debts.

In the letter, the church leaders encourage the global financial institutions to show “courageous leadership” and argue that debt cancellation “is the most immediate way to release the finance required to prevent millions of our sisters and brothers being needlessly pushed into poverty by the pandemic.”

Pope Francis has shown leadership on this issue, asking for debts to be cancelled “in recognition of the severe impacts of the medical, social and economic crises” faced by vulnerable countries as a result of the coronavirus. He also insisted on its importance in his recently published encyclical, Fratelli Tutti, saying that we all need to work together to build a better post-pandemic world.

Prime Minister Justin Trudeau recently promised to increase development and humanitarian funding for the countries of the Global South that are simultaneously battling the impacts of poverty, climate change and the COVID-19 pandemic. He also indicated that Canada would continue to advocate for debt relief for developing countries facing economic hardship because of the pandemic, including at the annual meetings of the World Bank and IMF.

Development and Peace — Caritas Canada, along with many Canadian churches, has long advocated for debt cancellation as a way to allow countries to provide healthcare and education for their citizens, rather than contributing much of their revenue to debt and interest payments.

* Image: Christ Cleaning the Temple (1655) by the Italian artist, Bernardino Mei (from Wikimedia Commons).

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