By Robin Gomes
It is impossible to “build back better” without cancelling the debt of poor countries and reinvesting these funds in Covid-19 response and recovery and to combat the climate crisis. This is the appeal that Caritas International makes to the Group of Seven rich nations of the world, or G7, who on Friday began a 3-day meeting in the small village of Carbis Bay in Cornwall, UK.
Britain, Canada, France, Germany, Italy, Japan and the United States, who make up the G7, are the world’s wealthiest large democracies, close allies and major trading partners that account for about half of the global economy. The European Union, Australia, South Africa, South Korea and India are guests at the meeting.
“Covid-19 put the rampant social injustices in today’s world under a magnifying glass. The only way to rebuild the future must be by eliminating such injustices,” says Aloysius John, secretary-general of Caritas Internationalis, the global confederation of some 165 national Catholic humanitarian and development agencies. “The G7 countries,” he says, “must lead the way in Covid-19 response and recovery to support those worst affected by the pandemic and support a just, green recovery.” “And the first step is to ensure that all debt payments are cancelled, including to private creditors. This is the quickest way of getting finance to where it is most needed,” Aloysius John says in his appeal.
Africa's debt problem
He points out that through its grassroots presence in some 200 countries and territories worldwide, the Caritas Confederation constantly witnesses the dramatic consequences of debt on the people in developing countries. Zambia, for example, uses 45 per cent of its national annual budget to service its massive debt. “How can a country rebuild with such a burden?” Aloysius John asks. “And how can it respond to Covid if the few resources available cannot be used to strengthen the national health system – including faith-based organizations providers – that would store and distribute vaccines?”
SRDs for the global south
African governments alone are expected to pay $23.4 billion in debt repayments to private creditors in 2021 – that is over three times the cost to purchase vaccines for the entire continent.
In this regard, Caritas draws attention to the use of the Special Drawing Rights (SDRs), the reserve asset that the International Monetary Fund (IMF) makes available to members countries. It says that the issuance of new SDRs would “provide finance directly to governments in the global south to respond to the current crises”. “New SDRs available to advanced economies should be used to provide grants to tackle global challenges such as strengthening health systems, access to vaccine and investing in a just, green recovery.” The G7 should also take the climate crisis seriously, pledging to end subsidies for fossil fuels.