Will the G20 cancel the debt of the countries of the South?

The pressure must be maintained for the cancellation of the debts of the middle-income countries of the South – and not only of the “poorest” – for two main reasons.

First, debt cancellation is in many countries a matter of survival. Due to the effects of the coronavirus, 265 million people could face starvation by the end of the year and more than half a billion people could be pushed into poverty. In this context, having a debt paid would be totally deadly. Even before this crisis, 64 countries were prioritizing debt service [1] on health services and 113 countries planned to implement austerity measures IMF
IMF
International Monetary Fund

Together with the World Bank, the IMF was founded on the day the Bretton Woods agreements were signed. Its first mission was to support the new standard exchange rate system.

When the Bretton Woods fixed rate system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman of world capital: it acts as policeman when it applies its structural adjustment policies and as a firefighter when he intervenes. to help governments at risk of not repaying their debt.

As with the World Bank, a weighted voting system works: according to the amount paid as contribution by each member state. 85% of the votes are needed to modify the IMF Charter (meaning that the USA with 17.68% of the votes has a de facto right of veto on any change).

The institution is dominated by five countries: the United States (16.74%), Japan (6.23%), Germany (5.81%), France (4.29%) and the Kingdom United (4.29%) .
The other 183 member countries are divided into country-led groups. The most important (6.57% of the vote) is led by Belgium. The smallest group of countries (1.55% of the vote) is led by Gabon and includes African countries.

http://imf.org incentives. This has increased gender inequalities as the consequences of austerity disproportionately affect vulnerable people and especially women.

Second, debt cancellation is a matter of justice. It is a fact that a large part of the debts contracted by countries have not benefited their people. Such debts are said to be “odious” [2] under international law and therefore should not be reimbursed. Auditing the debts before claiming their reimbursement could easily prove if this is the case. Such an audit, which should involve civil society, would also make it possible to identify the different responsibilities of creditors and debtors and thus prevent the same mistakes from happening again. But unfortunately, creditors have so far refused to audit their own claims. We, as civil society, should push them to do so. It is at least a question of transparency and accountability. While creditors such as the IMF and the world Bank
world Bank
BM

The World Bank was founded within the framework of the new international monetary system set up in Bretton Woods in 1944. Its capital is made up of contributions from member states and loans on the international money markets. It has funded public and private projects in Third World and Eastern European countries.

It is made up of several closely associated institutions, including:

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which grants loans in productive sectors such as agriculture or energy;

2. The International Development Association (IDA, 159 members in 1997), which grants long-term loans (35-40 years) to the least developed countries at very low interest rates (1%);

3. The International Finance Corporation (IFC), which provides both loan and equity financing to business enterprises in developing countries.

As Third World debt worsens, the World Bank (along with the IMF) tends to adopt a macroeconomic perspective. For example, it applies adjustment policies intended to balance the payments of heavily indebted countries. The World Bank advises countries undergoing IMF therapy on issues such as reducing budget deficits, rounding up savings, bringing foreign investors within their borders, or freedom of prices and exchange rates.

always claim “transparency” and “good governance”, they do not apply it to themselves!

Instead, creditors force repayment of debts as if it were an inconsequential obligation on the grounds that it is a matter of morality or contract performance. However, isn’t it immoral to make someone pay an immoral debt? Aren’t there legal arguments to cancel a debt? The answer is “yes” to both questions. This is what I learned during my 11 years with the Committee for the Abolition of Illegitimate Debt (CADTM), an international network that works with other debt organizations like EURODAD and Jubilee South .

Too bad I never learned about it while studying law and “development” at university. Nor did I learn that creditors like the World Bank had placed illegitimate debts on the backs of several African states at the time of their independence. This is precisely what happened barely 60 years ago when Belgium (the country where I live) and the World Bank transferred the colonial debt to the Congo in 1965. These colonial debts, in addition to being illegitimate, are void under public international law.

From the start of their independence, the states of the South were therefore chained to debt. Colonialism has morphed into neo-colonialism where creditors use debt as an instrument of political domination in the global capitalist economy. For example, when they provide debt relief, they do so by imposing economic conditions that benefit transnational corporations or they do so for geopolitical reasons. Human lives are not a big deal for them. A country can have a “sustainable” debt according to the indicators retained by the creditors while its people are dying of hunger or disease.

For these reasons, I believe it is illusory to think that the G20
G20
The Group of Twenty (G20 or G-20) is a group made up of nineteen countries and the European Union whose ministers, central bank directors and heads of state meet regularly. It was created in 1999 after the series of financial crises of the 1990s. Its objective is to encourage international consultation on the principle of an expanded dialogue based on the growing economic importance of a certain number of countries. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, India, Indonesia, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States, the United Kingdom and the European Union (represented by the Presidents of the Council and of the European Central Bank).
, which defends the interests of big creditors, will cancel large debts of even the “poorest” countries on the basis of justice. And if by chance the word “cancellation” were to be pronounced, one would have to be extremely vigilant. Didn’t the French President, Mr. Macron, say a few months ago that France was going to cancel African debts? In reality, no debt has been canceled by France, but repayment has simply been delayed.

A structural solution to the debt can only be found within a democratic framework. The G20 is not. In the meantime, it is useful to take advantage of these G20 meetings to raise awareness of this crucial issue which is global (the recent case of Greece has shown that debt violence knows no borders) and to make political calls in particular by signing the current petitions demanding the cancellation of the debt. More importantly, it is crucial to forge links between citizens of the South and the North who are struggling against the same system of indebtedness and also questioning the financing of “development”, North-South relations and the capitalist economy. Debt cancellation is a prerequisite for urgently needed structural changes.


Will the G20 cancel the debt of the countries of the South? To download

See also Analysis of the Entraide et Fraternité policy: Why does Belgium have to immediately and unconditionally cancel certain debts of the South? and the article Opinion (in French) Debts of Southern countries: It is time for France to support the adoption of a mechanism at the UN by a group of organizations including CCFD-Terre Solidaire (CIDSE member in France) .

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