Developing countries have been caught in a lose-lose situation for decades: stay underfinanced and therefore not in a position to meet the needs of their populations and internationally agreed development goals, or take out loans to fill the financing gap, but consequently fall into severe debt. This dilemma is increasingly also felt in European nations.
We want to ensure responsible lending and borrowing.
How you can help
THE PROBLEM WITH DEBT
Poor country debt payments are reaching peaks not seen since 2004. With more money servicing debt, and with the needs of creditors being privileged over the needs of people, social spending by governments is being hit, impacting human rights, and setting back progress towards the Sustainable Development Goals.
This worrying picture has been fuelled by a lending boom to the South, triggered by policy decisions introduced by rich economies in the wake of the global financial crisis.
Low global interest rates have incentivised capital flows into poorer countries with a specific focus on infrastructure financing.
Rich countries and international financial institutions continue to promote a new development finance orthodoxy, pushing the use of public funds to mobilise private capital. But the risks that this approach poses to debt sustainability in developing countries is often neglected.
WHAT WE’RE DOING
Citizens for Financial Justice works with our partners across Europe and allies in the global south to promote reforms and highlight country cases for which lenders should provide debt cancellation either because the debts are unsustainable or because they are illegitimate. We want:
- A binding set of standards to define and ensure responsible lending and borrowing.
- An independent and fair procedure for debt resolution, which should assess the legitimacy and the sustainability of countries’ debt burdens.
- A human rights based approach to debt sustainability.
- And cancellation of unsustainable and unjust debts.