UNITED NATIONS (AP) — The president of the U.N. Economic and Social Council called for urgent action Tuesday to help the growing number of countries already facing or at risk of “debt distress” because of the economic impact of the coronavirus pandemic.
Norway’s U.N. ambassador, Mona Juul, head of the 54-nation U.N. body, told a meeting on financing and recovery for the crisis that the decision by the world’s 20 major economic powers to freeze debt service payments for the world’s poorest countries through the end of the year isn’t enough.
She said the Group of 20’s freeze will free about $11 billion until the end of the year, but it’s estimated that eligible countries have an additional $20 billion in multilateral and commercial debt combined coming due in 2020.
Juul said that means even if the moratorium is extended to 2021, “many countries will have to make difficult choices between servicing their debt, fighting the pandemic and investing in recovery.”
Eric LeCompte, executive director of Jubilee USA Network, an alliance of more than 75 U.S. organizations and 700 faith communities working for debt relief, was sharply critical of the resistance of private creditors, commercial lenders and banks to participate in debt relief calls — despite calls by the G-20, International Monetary Fund, World Bank and United States.
“Because of the enormity of this crisis and the long-term challenges the markets could face, the fact that some private and commercial creditor blocks are not participating … baffles the mind,” he told the virtual meeting.
LeCompte said the U.N. Security Council must act “given that this crisis could devastate all of us, poor countries and the markets.”
He called on the Security Council to follow its “precedent in 2003 when it protected the assets of Iraq from creditor payments and now immediately make the same decision for the 73 countries that need this protection most to compel private creditors to join the G-20.”
“This decision would protect the assets of these countries and mandate that debt relief from official bilateral creditors is not used to pay private creditor debt,” LeCompte said.
He also said that instead of calling or inviting private creditors to participate, officials should say they “expect” their participation “in order to help compel it.”
LeCompte welcomed last week’s strong announcements from World Bank Group President David Malpass and said the IMF, G-20 and U.N. agencies should strengthen previous statements to say they “expect” private creditor participation in debt relief.
Malpass told last Thursday’s largest gathering of world leaders since the coronavirus pandemic began that he was among the first to call for a debt moratorium, and he welcomed the support of G-20 countries for a suspension of debt service payments by all bilateral creditors and “comparable treatment by commercial creditors.”
“I have been vocal in stating that all official bilateral creditors should participate, that commercial creditors should also participate on comparable terms and not exploit the debt relief of others,” Malpass said, “and that much more is needed, including longer term debt service relief and, in many cases, permanent and significant debt reduction.”