IMF: Indebted Countries Suffer if US Interest Rates Rise
international |
economics and finance |
press release 
Tuesday April 06, 2021 17:49
by Zachary Conti - Jubilee USA
The IMF warns that rising US interest rates could impact the ability of developing countries to pay debt, leading to prolonged economic crisis. The warning comes ahead of IMF, G20 and World Bank meetings, with the Fund's release of the Global Financial Stability Report.
The IMF warns that rising US interest rates could impact the ability of developing countries to pay debt, leading to prolonged economic crisis. The warning comes ahead of IMF, G20 and World Bank meetings, with the Fund's release of the Global Financial Stability Report.
“Except for Zambia, all countries that defaulted over the last year were middle-income countries,” said Eric LeCompte, the Executive Director of the religious development organization Jubilee USA Network. “Unfortunately, developing middle-income countries are not included in IMF and G20 debt relief solutions."
The report warns that recovery from the pandemic will be unequal between rich and poor countries and that more needs to be done to strengthen long-term stability around the globe. This morning the IMF released the World Economic Outlook Report estimating that 95 million more people fell into extreme poverty over the last year, living on less than $1.90 a day.
"Wealthy countries invested in big stimulus packages and can rebound more quickly," said LeCompte. "Billions of people in developing countries are left behind and their lives will be even worse after the pandemic."
Read the IMF's Global Financial Stability report here: https://www.imf.org/en/Publications/GFSR/Issues/2021/04/06/global-financial-stability-report-april-2021#FullReport
Read Jubilee USA's release on the IMF's World Economic Outlook report here: https://www.jubileeusa.org/pr_imf_weo_spring_2021
Read about the IMF extending a process to cancel debt payments for the world's 28 poorest countries here: https://www.jubileeusa.org/pr_imf_ccrt_fall_2021
Read about the IMF announcing support for $650 billion in emergency reserves here: https://www.jubileeusa.org/pr_imf_650_bn_sdr
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Jump To Comment: 1Ahead of Spring IMF and World Bank Meetings, World's Largest Unions, Human Rights Groups, Environmental and Religious Institutions Call for Aid, Debt Relief, Access to Emergency Reserves and Climate Protections
As G20, IMF and World Bank Spring Meetings convene virtually on global COVID response, 260 groups call for developing country aid and policies to prevent future crises and protect the environment.
Organized by Jubilee USA Network, 260 religious groups, anti-poverty organizations, labor unions, environmental and human rights institutions signed a letter on coronavirus crisis response to the White House, G20 and IMF.
“World leaders worked hard over the last year to tackle the health and economic crises spurred by the COVID pandemic," said Eric LeCompte, a UN finance expert who heads the religious development group Jubilee USA Network. Jubilee USA spearheaded the letter effort. “We must do more. Unless we take immediate action to solidify more aid and relief, we face lost decades of development and millions more will suffer.”
The G20 agreed to suspend debt payments for 73 developing countries through next June and created a process for the same countries to reduce debt. The IMF announced it would cancel debt payments for 28 of the world's poorest countries into October.
In recent weeks, the G7 supported an allocation of emergency reserve funds or Special Drawing Rights (SDRs). Treasury notified Congress of support for the aid and the G20 is expected to announce support for SDRs this week.
“If the IMF and G20 move forward emergency reserves, it means right away developing countries can access more than $200 billion to fight the health and economic impacts of the coronavirus," stated LeCompte. "We will likely see another additional process where hundreds of billions of more dollars in Special Drawing Rights could be transferred from wealthy countries to developing countries for further support."
Major religious institutions lead the Jubilee USA letter to the IMF, White House and G20. The signers include: The Union for Reform Judaism, All Africa Conference of Churches, National Council of Churches and the Episcopal, Evangelical Lutheran, Presbyterian, Methodist and United Church of Christ Churches. The Unitarian Universalist Association and the largest representations of Quaker communities and Buddhist consortiums are on the letter. The US Conference of Catholic Bishops sent a separate, companion joint letter with Jubilee USA Network and Pope Francis called again for a debt relief process in his Encyclical Fratelli Tutti.
Counting their membership in the millions, labor bodies including the International Trade Union Confederation, United Steelworkers (USW), American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and American Federation of State, County and Municipal Employees (AFSCME) joined faith groups on letter. Other signers include human rights organizations like Amnesty International and Pax Christi and also environmental advocates ranging from Amazon Watch to Friends of the Earth. Development groups were represented and included Islamic Relief, American Jewish World Service, American Friends Service Committee, Bread for the World, Action Aid, Oxfam, RESULTS and Health Gap.
On March 16th, Jubilee USA organized a roundtable with Treasury Secretary Janet Yellen and the highest-ranking leaders to specifically go over the calls in the Jubilee letter. A separate letter with 240 groups supporting SDRs was sent to the G20. The additional G20 SDR letter was coordinated by Jubilee USA and LATINDADD.
Read Jubilee USA's COVID-19 White House, IMF, G20 Letter here.
Read the joint US Conference of Catholic Bishops/Jubilee USA Network Letter to President Biden here.
Read about Jubilee USA's High-Level Roundtable with Secretary Yellen here.
Read Jubilee USA's release on the IMF's Global Financial Stability report here.
Read Jubilee USA's release on the IMF's World Economic Outlook report here.
Read about the IMF extending a process to cancel debt payments for the world's 28 poorest countries here.
Read about the IMF announcing support for $650 billion in emergency reserves here.
Read the letter from 240 groups to the IMF and G20 here.
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