Caritas Africa calls on world finance leaders to resolve debt crisis ahead of G20 summit
In their statement, Caritas Africa officials call on the G7 to grant borrowers “debt payment reprieve” while they reach an agreement with all creditors.
In addition, debt relief assessments should be reformed to enshrine the principle that human development and climate investments come before debt payments, they say.
“G7 countries, as key jurisdictions governing debt, should enact domestic legislation that prevents disputes with private creditors from undermining international debt relief efforts,” Caritas Africa officials say.
They call on global financial leaders to support African countries facing economic crisis due to the COVID-19 pandemic, which they say has reversed gains made in the fight against poverty on the continent.
“We, the religious leaders of Africa, are writing to the Group of 7 and African finance leaders as our continent attempts to navigate an unprecedented confluence of crises,” Caritas Africa officials say, and add, “ The fallout from the pandemic has led to an economic crisis.” contraction of more than 3% and reversing years of development progress.
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“After two decades of poverty reduction, more than 40 million Africans have fallen into extreme poverty since 2020,” they say.
According to officials of the entity which is one of the seven regions of Caritas Internationalis, global economic trends promise further upheaval. Caritas Africa officials say: “Less than three years after the deepest global recession in a century, the threat of recession looms again.
They note that the shock of the Russian-Ukrainian war, worsening drought in the Horn of Africa and concerted interest rate hikes in major economies threaten to derail the African continent’s “fragile” recovery. .
“Budget deficits and unpaid debts have reduced the room for maneuver our countries have to take the necessary measures to protect the most vulnerable and restore prosperity,” Caritas Africa officials lament.
In addition to their appeal to world economic leaders to address the debt crises, Caritas Africa officials are proposing the extension of Special drawing rights (SDR) to cover other areas of difficulty, including addressing the hunger crisis in various parts of Africa.
“The creation of $650 billion in SDRs for coronavirus response and recovery has bolstered stability and supported funding for vaccines, health and social protection, and economic recovery programs in many African countries,” they say, adding, “We believe that SDRs have a much bigger role to play in supporting health, education, food and social investments, climate adaptation and the achievement of the Sustainable Development Goals.
“We note with regret that despite promises made by rich countries to redirect $100 billion of their SDRs, this promise has not been fulfilled to date,” Caritas Africa officials say.
They add, “We join other voices in calling on rich countries to redirect a significant portion of their stockpile of over $400 billion in special drawing rights to African countries.”
They also underline the need to prevent future debt crises, stating: “Although debt reduction is essential and urgent, policies must lay the foundations for a sustainable exit from debt crises”.
According to Caritas officials, preventing future debt crises requires adopting responsible lending and borrowing rules and standards, including disclosure of debt contracts and authorization frameworks.
They say creditor and borrower countries have a responsibility to support compliance with these standards through their own laws and policies.
“Borrowers must not continue to bear the brunt of external shocks alone, which are increasingly frequent and endanger the poorest. Debt contracts should include clauses that fairly distribute the risks of natural disasters and other shocks between creditors and debtors,” Caritas Africa officials say in their statement shared with ACI Africa on October 6.