Global business, workers, civil society join call for debt relief for poorer nations

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WASHINGTON (Reuters) – The International Chamber of Commerce on Friday joined a global trade union and a major civil society group to urge immediate debt relief for the world’s poorest countries to help them fight the coronavirus pandemic and mitigate its economic impact.

In an open letter to finance ministers, the groups also urged countries to contribute to the Catastrophe Containment and Relief Trust, an International Monetary Fund instrument that provides debt service relief to its poorest members.

The ICC, the International Trade Union Confederation and Global Citizen, a group pushing to end extreme poverty by 2030, warned that failure to address the debt and financing needs of developing countries could trigger a series of debt defaults that would have devastating and wide-ranging consequences.

“We are concerned that a failure to immediately address the debt and financing needs of developing countries during this unprecedented crisis will result in large-scale loss of lives and livelihoods — potentially resulting in a fundamental collapse of social and economic systems,” the groups wrote.

The letter reflects increasing support for a push by the World Bank and IMF for official bilateral creditors to temporarily suspend debt payments for the poorest countries, which will be hit hardest by the pandemic.

Details of the IMF-World Bank proposal are still being finalized ahead of debate by finance officials at the virtual Spring Meetings of the Fund and the Bank next week.

On Friday, the Institution of International Finance, which includes over 450 banks, hedge funds and other financial firms, also backed the call. Other backers include the U.S. Conference of Catholic Bishops and the Jubilee USA Network alliance of faith groups.

Nearly 140 campaign groups and charities, including Oxfam and Save the Children, have also urged the Group of 20 major economies and private creditors to cancel debt payments.

In their open letter, published Friday, the ICC, ITUC and Global Citizen warned that some developing countries now faced an “impossible choice” between servicing sovereign debt repayments or paying nurses and purchasing ventilators.

“Without urgent action, we see a fundamental risk that a series of debt defaults will further exacerbate the unprecedented economic downturn already unfolding before us,” the groups said.