By Vatican News staff writer
"Every decision and policy on economic or financial issues impacts the lives of individuals, families and the well-being of society as a whole." With this premise, the Holy See is encouraging debt restructuring, and ultimately debt cancellation for the most vulnerable countries, to address the growing economic imbalances and the other crises they face as a result of the Covid-19 pandemic.
The Permanent Observer of the Holy See to the United Nations, Archbishop Gabriele Caccia, made this call on Thursday during the 75th Session of the UN General Assembly.
He pointed out in a statement that due to the demands imposed on the poorer countries by debt servicing and the economic impact of the pandemic, many of them are obliged to “divert scarce national resources from fundamental programs of education, health and infrastructure to debt payments.”
Archbishop Caccia reminded the UN, addressing the committee on macroeconomic policy in particular, that its work should ponder the “ethical implications to achieve economic prosperity for all in order to allow every person to thrive, and for countries to live in peace and stability.” As such, decisions and policies on economic or financial issues that impact the lives of individuals, families and the well-being of society as a whole “must be considered in a much broader light than only immediate financial gain or success.”
Covid-19 and the economy
Archbishop Caccia highlighted that financial inclusion and sustainable development have been affected by the Covid-19 health crisis due to its devastating impact on employment, production and international and national trade. No one, he notes – from States to families and individuals – has escaped the economic hardships caused by the pandemic.
However, some have felt the impact more than others. Developing countries, he says, are being hit with “a triple economic shock of collapsing export demand, falling commodity prices and unprecedented capital flight,” in addition to handling the pandemic with often inadequate health systems.
To address these hardships, Archbishop Caccia proposes working together to ensure that the economic “recovery packages” and “regeneration packages” are serving the common good. In particular, he highlights two sectors that need special attention in the recovery efforts.
The first according to the Archbishop, is micro, small and medium businesses. He points out that to revive the economy, funding should reach a large number of medium and small business enterprises that “comprise the backbone of economies” in both developed and developing nations.
The second sector concerns workers in “informal” employment. He explained that we have a “particular responsibility” towards these people – men and women – who are being laid off their jobs in areas like construction, catering, hospitality, domestic service and retail among others, and as such, find it hard to provide for themselves and their families. Many of them, he notes, turn to charitable organizations and religious institutions for help. Some others, especially the migrants and those without proper documentation, are unable to file for benefits.
Archbishop Caccia said there is extensive evidence that developing nations, faced with the obligation of diverting scarce resources towards debt repayment, risk undermining “integral development, weaken healthcare and education systems, as well as reduce the capacity of States to create conditions for the realization of fundamental human rights.”
The Archbishop, therefore, urged the international community to address the economic imbalances between nations by debt restructuring and ultimately cancellation “in recognition of the severe impacts of the medical, social and economic crises” faced by the most vulnerable countries as a result of the ongoing pandemic.
He also called on the international community to combat Illicit Financial Flows (IFFs) which, by diverting resources from public spending and cutting the capital available for private investment, “deprive countries of the desperately needed resources to provide public services, fund poverty-reduction programs and improve infrastructure.”
Concluding, Archbishop Caccia encouraged the UN to “find ways to stress the broader and ethical implications of economic activity in the years to come” and emphasized the need to transform the economy to be “genuinely at the service of the human person.”
The Pope has repeatedly stressed the need for a new economic model especially as countries restart after the Covid-19 pandemic. He has often said that the "only way out of the current crisis is together."
During his Urbi et orbi for Easter, he specifically addressed the topic of debt relief. "In light of the present circumstances," Pope Francis said, "may international sanctions be relaxed, since these make it difficult for countries on which they have been imposed to provide adequate support to their citizens, and may all nations be put in a position to meet the greatest needs of the moment through the reduction, if not the forgiveness, of the debt burdening the balance sheets of the poorest nations."
In his latest Encyclical Fratelli tutti, he spoke about debt relief within the context of the fundamental right of peoples to subsist and grow. This right, he said, is at times "severely restricted by the pressure created by foreign debt." That debt stifles and severely limits development, he continued. "While respecting the principle that all legitimately acquired debt must be repaid, the way in which many poor countries fulfil this obligation should not end up compromising their very existence and growth."