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Development organisations warn of debt crisis
Germany’s debt relief alliance erlassjahr.de and the catholic relief organisation Misereor called on the G20 Ministers of Finance, who met in Buenos Aires, Argentina, in mid-March, to immediately create a debt relief option in order to fend off the catastrophic implications of a debt crisis for the poorest and most vulnerable people in the Global South. In the run-up to the meeting of ministers, the organisations presented their “Schuldenreport 2018” (2018 debt report), according to which 119 developing countries and emerging economies are critically indebted, while the debt situation has further worsened in 87 of them and 13 countries have had to suspend their debt repayments. Politically unstable countries such as Burundi as well as countries whose economy is heavily dependent on exports and that are suffering from the collapse of prices on the commodities market, like Angola or the Republic of Congo, are affected in particular, the report states.
The organisations speak of worrying developments, reporting that people are being driven more and more into poverty, while a major portion of budgets goes into debts servicing instead of being made available to social services such as health and education. Growing unemployment and social tension, rising migration levels and instability in whole societies are the consequences, they demonstrate, and warn that continuously rising government debt is thus also leading to more social and political instability world-wide.
The two organisations argue that while the G20 have opted for promoting private investment in African countries with initiatives such as the Compact with Africa, they are completely ignoring the corresponding growing risk for the debt sustainability of these countries, which they claim is totally irresponsible. In addition, they call for debt relief options for regionally or thematically circumscribed groups of countries. A debt relief option of this kind would, for example, be conceivable for Caribbean island nations that have been especially hard hit by natural disasters or the impact of climate change.
Download „Schuldenreport 2018“ (in German)