The new global debt crisis
Spiralling debt repayments divert precious resources from governments that can ill afford to spare them. Without spending money on basic services like clean water, sanitation and health, there is little hope of poor countries meeting the development need, and human rights, of their citizens.
This report explores the current debt crisis, its risks, and ways to tackle it.
Produced as part of the Citizens for Financial Justice project
Introduction from Amanda Mukwashi, former Chief Executive Officer, Christian Aid
Launching this year’s Christian Aid Week, former prime minister Gordon Brown said: “Christian Aid is now one of the great national institutions. [It] has achieved a reputation and acknowledgement by the British public …and it shows that social movements that bring about change are built on moral foundations.”
We are committed to honouring our place in the hearts of the British public to expose and end the causes of global poverty, promote the voices and agency of affected communities, and to help create a new kind of economic model that protects the most marginalised people and our shared planet.
We need a new model because our current economic system is failing.
One of the clearest signs of this failure is the emergence of a ‘new global debt crisis’ and this is what we are exploring in this new report – launching during Christian Aid Week 2019. As Christian Aid, we say that enough is enough. This debt crisis poses additional risk to communities already experiencing multiple vulnerabilities and being left behind. We will not walk on the other side, ignoring the shameless reality that many poor communities are suffering the impacts of unfair debts that have been imposed on them by those in the global north.
Research by the Jubilee Debt Campaign, with whom we have teamed up to produce this report, reveals that 31 countries across the world are now in debt crisis, with a further 82 at risk. Average debt payments have risen for global south governments, as a proportion of government revenue – increasing by 85% since 2010 – and are at the highest level since 2004.
This is unacceptable. And so, though outward-facing into the world, we unashamedly seek to influence the UK government, and in this report we call urgently for an end to complicity in the crisis which is already having a serious impact on the lives of some of the most vulnerable communities worldwide.
Our calls include the call to create transparency in all loans given under UK law or by UK-based banks, banning vulture funds from profiting from the new debt crisis and lobbying the International Monetary Fund (IMF) to cancel debts incurred by Sierra Leone’s tackling of the Ebola crisis.
Further, this Christian Aid Week, we are calling on the UK Chancellor and government to use their influence with the IMF to: ensure all Sierra’s Leone’s debts on the loans the country received for fighting the Ebola outbreak are written off, and take urgent action to prevent new debt crises in countries of the global south and tackle them effectively when they arise.
Debt needs a different, proactive approach from international policymakers. Current trends in debt such as the involvement of the private sector mean the crisis must be handled multilaterally. The IMF and World Bank – institutions I have recently visited with a critical voice – need to acknowledge that their own policies have contributed to the debt crisis and are increasing inequality.
The Jubilee 2000 campaign, inspired by the biblical imperative to forgive unsustainable debts, led to a major international round of debt relief for countries trapped in poverty. But the cause remains urgent. Now is the time to act again.