Religious leaders advocate debt relief for African countries ahead of G20 Summit Religious leaders advocate debt relief for African countries ahead of G20 Summit 

Religious leaders advocate debt relief for Africa ahead of G20

African faith leaders have called on world leaders and African finance leaders to promote initiatives that help Africa emerge from its debt crises, while appealing for the removal of unpayable debt which sinks countries in the continent into further poverty.

By Benedict Mayaki, SJ

As world and global finance leaders prepare to meet in November for the G20 Summit in Bali, Indonesia, African religious leaders have called for the removal of unpayable debts, highlighting that the burden is further plunging countries in the continent into poverty.

The religious leaders made the statement at the end of a workshop organized by Caritas Africa, which brought together Catholic bishops and others in Accra, Ghana, to discuss debt, aid and the accountability agenda for Africa, ahead of the G20 Summit.

They said that the continent struggles with “an unprecedented confluence of crises” and called on international leaders to prioritize actions to “to enable Africa’s recovery with resilience and resumption of progress towards the Sustainable Development Goals and the Paris Agreement.”

Dire situation  

In the statement addressed to the Group of 7 and African Finance Leaders, the faith leaders underscored the dire situation in many countries in Africa.

They noted that a fallout from the pandemic led to “economic contraction of more than 3 % and reversed years of development progress” and even after two decades of poverty reduction, more than 40 million Africans fell into extreme poverty since 2020.

Moreso, less than 3 years after the biggest global recession in a century, the threat of recession looms again with the shock of the Russia-Ukraine war threatening the highest food and energy inflation in decades. In addition, worsening droughts in the Horn of Africa and the concerted interest rate hikes in the major economies threaten to derail the fragile recovery of Africa.

Resolving debt crises

“The first priority”, said the faith leaders, “is to remove the crushing burdens of unpayable debts, a call that we find consistently in the voice of leaders of diverse religious traditions, certainly those of the Catholic Church.”

They recalled that St. John Paul II, in 1999, said that “debt relief is ... urgent. It is, in many ways, a precondition for the poorest countries to make progress in their fight against poverty.” Likewise, Pope Francis, last year, underlined that “relieving the burden of debt of so many countries and communities today, is a profoundly human gesture that can help people to develop, to have access to vaccines, health, education and jobs.”

The leaders also lamented that two years after the launch of the G20 debt relief initiative – the “Common Framework for Debt Treatments Beyond the Debt Service Suspension Initiative” – has yet to deliver debt reductions for any applicant. They add that the debt initiative’s “uncertainty, functioning and timeframes make borrower countries hesitant to even approach it.”

In their statement, the faith leaders encouraged the G7 to “spearhead the establishment of processes that bring together public and private creditors for timely, speedy and orderly debt crises resolution” and “grant borrowers a stay on debt payments while they reach agreement with all creditors.”

Also “debt relief assessments should be reformed to enshrine the principle that human development and climate investments come before debt payments,” they urged, adding that “G7 countries, as key debt governing jurisdictions, should pass domestic legislations that prevent private creditor litigation from undermining international debt relief efforts.”

Special Drawing Rights

In addition to their appeal for debt relief, the faith leaders proposed the extension of Special Drawing Rights (SDRs) to cover specific areas of difficulty in African countries.

“The creation of $650 billion in Special Drawing Rights (SDRs) for coronavirus response and recovery has enhanced stability and supported funding for vaccines, health and social protection, and economic stimulus programs in many African countries,” they said. “We believe SDRs have a much more significant role to play in supporting health, education, food and social investments, climate adaptation and the achievement of the Sustainable Development Goals.”

They however note with regret that “in spite of pledges made by rich countries to rechannel USD 100 billion of their SDRs, this promise remains unfulfilled to date.” They thus, join other voices in calling on rich countries “to rechannel a significant portion of their stock of more than $400 billion in Special Drawing Rights to African countries.”

Preventing fiscal and debt crises

To prevent future instances of debt crises, the leaders suggested adopting “responsible lending and borrowing rules and standards, including debt contract disclosure and authorization frameworks.”

They recommended that “both creditor and borrower countries have a responsibility in supporting compliance with such standards through their own laws and policies.”

“Borrowers should not continue to shoulder alone the weight of external shocks, which are increasingly frequent and put their poorest at risk. Debt contracts should include clauses that fairly allocate the risks of natural disasters and other shocks between creditors and debtors,” they said.

Finally, the faith leaders highlighted that much needs to be done at the domestic public policy level to enhance confidence of citizens and improve domestic resource mobilization. They called on Heads of State to “improve governance by promoting transparency, inclusion and accountability for public and natural resources” and stressed that the world is in urgent need of greater justice, both within national communities and at the international level.

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11 October 2022, 11:22