No debt relief during COVID-19 crisis

December 11, 2020
Covid-19 and Third World debt
Graphic: Alexey Hulsov, Pixabay

Governments and major multilateral institutions like the World Bank (WB), the International Monetary Fund (IMF) and regional development banks have used repayment of public debt to generalise policies that have damaged public health systems.

This has meant job cuts in the health sector, job instability, reduced numbers of hospital beds, closing down neighbourhood health services, increased medical costs both for care and for medicines, under-investment in infrastructure and equipment, privatisation of various health sectors, public under-investment in research and development for treatments to the advantage of big private pharmaceutical groups and so on.

Even before the COVID-19 pandemic broke out, these policies had already led to enormous loss of human lives, and around the world health personnel were organising protests.

To fight COVID-19, and beyond that, improve the health and living conditions of populations, emergency measures must be taken.

Immediate suspension of debt payments and better still, cancellation of debt, must take priority.

Neither the WB nor the IMF have cancelled any debts since the beginning of the COVID-19 pandemic. Though they have made endless declarations calculated to give the impression that they are taking very strong measures, this is completely false.

The mechanism put in place by the IMF, the WB and the G20 is identical to the measures taken after the tsunami that hit India, Sri Lanka, Bangladesh and Indonesia in December 2004. Instead of cancellation, public creditors simply postponed the due dates. As for the IMF, not only does it not end repayments, but it does not even suspend them. It has set up a special fund financed by rich countries into which the IMF can dip to repay itself.

Worse still, since March, the IMF has extended the loan agreements that entail continuing with structural adjustment measures.

As for the WB, since March it has received more in debt repayments from developing countries than it has paid out to finance either donations or loans.

[Abridged from the Committee for the Abolition of Illegitimate Debt.]

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