JUBILEE
Global business, workers, civil society join call for debt relief for poorer nations
Reuters April 10, 2020

WASHINGTON, April 10 (Reuters) - The International Chamber of Commerce on Friday joined a global trade union and a major civil society group to urge immediate debt relief for the world's poorest countries to help them fight the coronavirus pandemic and mitigate its economic impact.

In an open letter to finance ministers, the groups also urged countries to contribute to the Catastrophe Containment and Relief Trust, an International Monetary Fund instrument that provides debt service relief to its poorest members.

The ICC, the International Trade Union Confederation and Global Citizen, a group pushing to end extreme poverty by 2030, warned that failure to address the debt and financing needs of developing countries could trigger a series of debt defaults that would have devastating and wide-ranging consequences.

"We are concerned that a failure to immediately address the debt and financing needs of developing countries during this unprecedented crisis will result in large-scale loss of lives and livelihoods — potentially resulting in a fundamental collapse of social and economic systems," the groups wrote.

The letter reflects increasing support for a push by the World Bank and IMF for official bilateral creditors to temporarily suspend debt payments for the poorest countries, which will be hit hardest by the pandemic.

Details of the IMF-World Bank proposal are still being finalized ahead of debate by finance officials at the virtual Spring Meetings of the Fund and the Bank next week.

On Friday, the Institution of International Finance, which includes over 450 banks, hedge funds and other financial firms, also backed the call. Other backers include the U.S. Conference of Catholic Bishops and the Jubilee USA Network alliance of faith groups.

Nearly 140 campaign groups and charities, including Oxfam and Save the Children, have also urged the Group of 20 major economies and private creditors to cancel debt payments.

In their open letter, published Friday, the ICC, ITUC and Global Citizen warned that some developing countries now faced an "impossible choice" between servicing sovereign debt repayments or paying nurses and purchasing ventilators.

"Without urgent action, we see a fundamental risk that a series of debt defaults will further exacerbate the unprecedented economic downturn already unfolding before us," the groups said. (Reporting by Andrea Shalal, Editing by Rosalba O'Brien)

World Bank's Malpass upbeat on prospects for progress on debt relief

By Andrea Shalal Reuters April 10, 2020


FILE PHOTO: World Bank President David Malpass attends the "1+6" Roundtable meeting at the Diaoyutai state guesthouse in BeijingMore


By Andrea Shalal

WASHINGTON (Reuters) - World Bank Group President David Malpass on Friday said he was confident of progress on his joint call with the International Monetary Fund for a temporary standstill in official bilateral debt payments by the world's poorest countries.

Malpass said the proposal would be discussed next week by finance officials of both the Group of Seven (G7) and Group of 20 (G20) economies, and he expected a "broad endorsement" by the 25-member joint Development Committee of the World Bank and IMF when it meets on Friday.

"The world’s poor are looking to the international community to show decisive leadership on debt relief, and I am confident of progress," he said in a posting on LinkedIn.

The World Bank and the IMF first issued their call for debt relief on March 25. [nL1N2BI15A] The initiative won significant backing over the past week, including from the Institute of International Finance, a group that represents over 450 global banks, hedge funds and other financial firms. [nL2N2BX1HW]

The proposal calls for China and other big creditors to suspend debt payments from International Development Association (IDA) countries beginning May 1, freeing up resources for them to fight against the pandemic. The IDA countries are home to a quarter of the world’s population and two-thirds of the world’s population living in extreme poverty.

Malpass said the proposal was discussed twice this week during working-level meetings of the G20, and would be on the agenda during virtual ministerial level meetings next week.

Two sources familiar with the discussions said G20 finance officials were likely to endorse the proposal when they meet online on April 15. The issue is particularly critical for G20 member China, which has sharply increased lending to developing countries over the past two decades.

China's government, banks and companies lent some $143 billion to Africa between 2000-2017, much of it for large-scale infrastructure projects, according to data from Johns Hopkins University. By some estimates, Chinese lending now dwarfs World Bank loans in Africa.

Malpass said borrowers that requested forbearance would be expected to ask for "at least comparable terms" from commercial creditors. In return for the suspended payments, beneficiary countries would commit to debt transparency and agree to direct additional resources toward health and economic needs, he said.

He said the World Bank and IMF would work closely with IDA countries and creditors to evaluate each country's debt sustainability outlook based on reconciled debt data and debt service requirements.

Malpass last month said IDA countries faced official bilateral debt service obligations of $14 billion through the end of 2020.

Pandemic debt relief needs private sector involvement - IIF

Reuters April 9, 2020


WASHINGTON, April 9 (Reuters) - Both private and public sector initiatives are needed to help the world's poorest countries deal with pandemic-related debt challenges, the Institute of International Finance, which includes over 450 banks, hedge funds and other global financial firms, said on Thursday.

In a letter to the World Bank, International Monetary Fund, OECD and Paris Club, the group welcomed a proposal from the World Bank and the IMF calling on official bilateral creditors to suspend debt payments for the poorest countries, if asked.

It said both official and private creditors should commit to debt payment forbearance for those countries for a specific period of time, without waiving payment obligation, adding that all types of private creditors and obligations should be treated alike, regardless whether they are foreign or domestic. (Reporting by Andrea Shalal Editing by Chizu Nomiyama)

Catholic bishops, faith groups urge Trump to back debt relief for poor countries

By Andrea Shalal Reuters April 8, 2020

WASHINGTON, April 9 (Reuters) - The U.S. Conference of Catholic Bishops and an alliance of faith groups have urged President Donald Trump to champion a moratorium on debt payments for poor countries hit by the coronavirus pandemic that has triggered a global recession.

In a letter sent to the U.S. president on Wednesday, the groups said U.S. leadership was needed to both to help the 76 poorest countries in the world combat the pandemic and safeguard U.S. economic interests.

A move by rich countries, the Group of 20 major economies, the International Monetary Fund and the World Bank to suspend debt payments for those countries would allow them to bolster their health systems and provide for their own health safety, the groups wrote in a letter dated Wednesday.

The novel coronavirus that emerged in China in December has raced around the globe, infecting 1.41 million people and killing 87,700, according to a Reuters tally.

The IMF and World Bank, backed by the World Health Organization, have called on China, the United States and other bilateral creditors to temporarily suspend debt payments by the poorest countries so they could use the money to halt the spread of the disease and mitigate its financial impact.

G20 finance ministers and central bankers are due to consider the issue when they meet online next week during the Spring Meetings of the IMF and World Bank.

The letter from the Catholic bishops and Jubilee USA Network, a non-profit alliance of religious, development and advocacy groups, comes amid growing concern about the high level of debt of developing countries and emerging market economies.

"The current financial crisis threatens U.S. imports and exports from and to the developing world," the bishops and Jubilee USA wrote. "Providing a suspension of debt payments and debt relief will help safeguard our common interests of returning the U.S. economy to prosperity and growth."

The groups said the debt payment moratorium should both be interest-free, and expose all debts, including private and predatory loans.

Such a decision could help better assess debt sustainability and vulnerabilities, and, if warranted, trigger a process to restructure debt, the groups told the U.S. president.

Lending by Western countries and multilateral institutions slowed after a major round of debt restructuring in 1996, but the Chinese government, banks and companies have dramatically expanded their lending to developing countries since then. (Reporting by Andrea Shalal; Editing by Michael Perry)