Debt cancellation and Sovereign Debt Workout Mechanism

    Our demands

    • Permanent cancellation of external debt payments for at least four years to all developing countries in need without penalties;
    • Provision of additional, emergency finance without creating more debt, nor conditionalities;
    • Protection of developing countries from lawsuits when ceasing debt payments at national and multilateral levels;
    • A debt relief initiative to bring developing country debts down to sustainable levels and which considers countries’ long-term financing needs to pursue the SDGs, climate goals, and human rights and gender equality commitments;
    • A sovereign debt workout mechanism at the UN that would comprehensively address unsustainable and illegitimate debt.
    The dimension of Gender Equality

    Public and private debt reduce the fiscal space for governments to ensure the maximum amount of resources for gender equality and women’s human rights as well as sustainable development. For decades, conditionalities (including austerity measures) have depleted the capacity of States to ensure health and education systems, as well as social protection mechanisms. Economic shocks linked to debt have proven to increase the burden of unpaid domestic and care work, because the capacity of social expenditure is reduced, and women amortize those shocks.

    IMF: Divergent recoveries stem from divergent policies Pt. II

    With Bhumika Muchhala

    A progressive fiscal framework recognizes that human development is the exact and ultimate return that public investment strategies must be rooted in. If the SDGs provide the basis for developing such a fiscal framework, existing fiscal rules focused on fiduciary solvency and flawed debt sustainability assessments are inadequate.

    Fiscal progressivism entails allowing for higher budget deficit paths and/or higher levels of inflation without jeopardizing macroeconomic stability.

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    IMF: Divergent recoveries stem from divergent policies Pt. I

    With Bhumika Muchhala

    According to a recent report by the European Network on Debt and Development, a debt pandemic is revealed where $194 billion have been transferred from developing countries to private, multilateral and bilateral creditors in 2020, and 58 countries experienced more revenue leaving their borders than coming in.

    In 2020, external public debt service was larger than health care expenditure in at least 62 countries, and larger than education expenditure in at least 36 countries.

    What this picture makes exceedingly clear is that it is not only the inequity of vaccine access that is constraining pandemic recovery for developing countries; it is also an unsustainable debt burden draining vital financial resources to invest in public services that protect the lives and livelihoods of local populations.

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    Eurodad just published a Frequently Asked Questions document to analyze the interconnections between the debt and climate crises: "The Climate Emergency: What's debt got to do with it?"

    The document provides information for activists and social movements working on climate, debt and global economic and environmental justice. It answers questions such as: "Which countries are the most affected by climate change and debt distress? What's wrong with climate finance in relation to the debt crisis?"- and much more: it includes tips on how to get involved and some available resources to keep up to date with both issues.

    Join the Global Action for Debt Cancellation, that took place between October 10th and 17th.