Cross party call for debt cancellation for world’s poorest

MPs and Peers from across political parties have joined calls for debt payments to be cancelled for the world’s poorest countries in response to the pandemic.

At the weekend faith leaders across the UK united in a call to urge Chancellor Rishi Sunak to work with other finance ministers to cancel debt for the world’s poorest countries.

88 parliamentarians of varying faiths and none have now supported that call with a letter coordinated by Catherine McKinnell MP, Chair of the Parliamentary Friends of CAFOD, the Catholic Agency for Overseas Development.

Commenting on the letter, Catherine said:

“64 of the world’s poorest countries went into this crisis spending more on debt payments than they were on their own countries’ healthcare. The global health crisis is now hitting their economies hard and whilst there is international agreement on suspending debt payments this year, this is only storing up problems for a debt crisis in future.

“At a time when these countries are tackling the virus and responding to the challenge of climate change, the right thing to do for the most vulnerable people around the world is to cancel the payments entirely.

“I hope the Chancellor will listen to this cross-party, multi-faith call by cancelling the debt payments until at least next year, and also persuade other countries and institutions to do the same.”

Catherine also raised this issue at International Development questions in the House of Commons yesterday.

The world's poorest countries went into #covid19 spending more on debt payments than their own healthcare. There are…

Posted by Catherine McKinnell on Wednesday, 15 July 2020

Full text of the letter:

Dear Chancellor of the Exchequer,

We are writing to you as members and supporters of the Parliamentary Friends of CAFOD, the official aid agency of the Catholic Church, including those sharing a variety of faiths and none, as we are deeply concerned about the impact the Coronavirus pandemic is having on the world’s poorest people. With the G20 finance ministers meeting coming up, we are reaching out to urge you to use this opportunity to ensure countries that are suffering from the economic fallout of the pandemic are given the full debt cancellation they need to survive, recover and rebuild from this crisis.

Across the world, low and middle-income countries are not only dealing with the ongoing health emergency but are also facing unimaginable financial hardship. The global economic slowdown means this will only get worse in the months and years ahead as the price of raw materials collapses, demand for exports declines and remittances are scaled back.

We know that the quickest way to address this worrying financial outlook is to keep money in developing countries by cancelling debt payments. At the start of 2020, 34 countries were already in debt default or at high risk of being so, and before the coronavirus crisis began, 64 developing countries were already spending more on debt payments to other governments or institutions than they were on their own countries’ healthcare.

Pope Francis has spoken out recently on the injustice of debt, saying: “It cannot be expected that the debts which have been contracted should be paid at the price of unbearable sacrifices. In such cases it is necessary to find… ways to lighten, defer or even cancel the debt.”

Similarly, the Symposium of Bishops Conferences of Africa and Madagascar (SECAM) has said: “Undoubtedly, initiatives have already been taken in the management of the impact of the pandemic, but we would like to go further to plead for the massive cancellation of debts of African countries, to enable them to revive their economies.”

We welcome the leadership shown by the UK thus far, and welcome steps taken including the contribution of £150 million to the IMF’s debt relief scheme and the move, as part of the G20, to  suspend debt payments due to other governments in 2020 from the 77 poorest nations – saving an estimated $12 billion.

These are important first steps, but they do not go far enough. Suspending, rather than cancelling, debt is only a temporary solution and does nothing to tackle unsustainable debt levels in the long term. It means that without further action, countries will face an even bigger debt crisis in two years’ time. Furthermore, in focusing only on loans to other governments, the G20 debt relief fails to address the issue of debt owed to private lenders or to multilateral banks.

Developing countries that are suffering the health and economic impact of Covid-19 need their debt payments to all creditors (bilateral, multilateral and private) cancelled immediately to enable them to care for people affected and to help their economies to recover in a way which protects, rather than damages, our common home.

We urge you to take the following proposals to the G20 Finance Ministers meeting so that you can work with your counterparts to ensure debts are cancelled for those countries that need it, and a future debt crisis is prevented:

1) G20 to cancel all bilateral debt payments for the countries that need it until at least the end of 2021.

2) Call on the World Bank and IMF to cancel all debt payments for the 77 poorest nations, and all additional countries that need it, until at least the end of 2021.

3) Ensure all debt cancellation efforts include debts owed to private creditors and call on private lenders not to take legal action against any country who stop debt payments due to the economic fallout of the Coronavirus pandemic.

4) Prevent a future debt crisis by committing to work with other governments and international institutions in a new global process for long-term debt restructuring to bring debt repayments from the poorest nations to a sustainable level.

Once again, we thank you for your work thus far on debt relief and hope that you will use this upcoming opportunity to take this work further so that all countries are able to recover from this global pandemic.

With kind regards,

Catherine McKinnell MP, Chair of the Parliamentary Friends of CAFOD

Rt Hon Hilary Benn MP

Rt Hon Andrew Mitchell MP

Daisy Cooper MP

Stella Creasy MP

Jon Cruddas MP

Alex Cunningham MP

Allan Dorans MP

Dr Stephen Farry MP

Margaret Ferrier MP

Patricia Gibson MP

Patrick Grady MP

Andrew Gwynne MP

Claire Hanna MP

Rt Hon Dame Margaret Hodge MP

Chris Law MP

Tony Lloyd MP

Caroline Lucas MP

Kenny MacAskill MP

Steve McCabe MP

Rt Hon John McDonnell MP

Carol Monaghan MP

Dame Diana Johnson MP

Sir David Amess MP

Virendra Sharma MP

Tommy Sheppard MP

Alyn Smith MP

Laurence Robertson MP

Rt Hon Stephen Timms MP

Dr Philippa Whitford MP

Rushanara Ali MP

Paula Barker MP

Dr Lisa Cameron MP

Sarah Champion MP

Yvonne Fovargue MP

Ian Byrne MP

Rt Hon Sir George Howarth MP

Angus MacNeil MP

Stuart McDonald MP

John McNally MP

Grahame Morris MP

Kate Osborne MP

Bell Ribeiro-Addy MP

Sarah Olney MP

Andy Slaughter MP

Gareth Thomas MP

Richard Thomson MP

Claudia Webbe MP

Derek Twigg MP

Baroness Hooper CMG

Baroness Goudie

Rt Hon. the Baroness Blackstone

Lord Rennard MBE

Baroness Healy of Primrose Hill

Lord Desai,

Lord Judd

Baroness Tonge

Lord Hylton

Lord Liddle

Baroness Brown of Cambridge DBE FREng FRS

Baroness Hussein-Ece OBE

Rt Hon. the Lord Browne of Ladyton

Baroness Watkins of Tavistock

Rt Hon. the Lord McNally,

Baroness Ritchie of Downpatrick

Rt Rev. the Lord Bishop of St Albans

Baroness Bryan of Partick

Baroness Lister of Burtersett CBE

Baroness Jones of Moulsecoomb

Rt Hon. the Baroness Royall of Blaisdon

Rt Hon. the Baroness Armstrong of Hill Top

Rt Hon. the Lord Dholakia OBE DL

Baroness Thomas of Winchester MBE

Baroness Bennett of Manor Castle

Lord Hendy QC

Lord Beecham

Rt Rev. the Lord Bishop of Durham

Lord Hastings of Scarisbrick CBE

Rt Hon. the Lord Tyler

Lord Shipley OBE

Rt Hon. the Baroness Hayman GBE

Lord Mendelsohn

Baroness Crawley

Baroness Cox

Lord Loomba CBE

Baroness Sheehan

Rt Hon. the Lord Pendry

Rt Rev. the Lord Bishop of Rochester