* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
As the world’s finance ministers meet to discuss how to recover from COVID-19, cancelling the debt of poor nations is a start
Alex Lenferna is a climate justice campaigner with 350Africa.org and secretary of the South African Climate Justice Coalition
The people who control the budgets of the world’s 20 biggest economies are meeting Saturday. At the G20 Finance Minister and Central Bank Governors’ meeting in Saudi Arabia, they will discuss how to spend trillions in public money on the economic recovery from the coronavirus pandemic.
Their answer should be to invest in a more socially and ecologically just future – as we cannot go back to the broken status quo, which was driving the climate crisis and deepening inequality.
While many countries in the global north are faced with the luxury of choice in how they recover, not all have that luxury. Instead, much of the global south is faced with somewhat of a Sophie’s choice when it comes to trying to recover from the impacts of COVID-19.
They can take on more international debt to fund their recovery and get locked into cripplingly high interest rates and structural adjustment programs, which will harm them for years to come.
Or they can nottake on debt and fail to invest in stimulus and recovery packages, condemning their economies to deeper recession and dwindling public services.
Many of the world’s poorest countries are already saddled with a staggering debt load and cannot raise capital domestically. On average in sub-Saharan Africa, interest repayment is the highest expenditure portion and remains their fastest growth expenditure in fiscal budgets.
This reality has resulted in stark and deepening inequalities. According to a new Christian Aid report, Germany and Italy have spent more than 25% of GDP on COVID-19 economic stabilisation whereas Malawi, Kenya and DRC have spent less than 1%.
The deepening injustice at the heart of this all, is that the indebtedness that much of the global south faces is a result of colonial legacies that enriched the global north.
The global south broke off the shackles of colonialism only to enter indebted servitude – where they had to pay incredibly high interest to creditors from the global north to raise funds to dig themselves out of the mess that colonialism had left them in.
Compounding that injustice, the climate crisis, caused predominantly by the global north, is ravaging the global south. And while the global south is legally forced to pay its financial debt, the global north leaves its climate debt mostly unpaid – except for some measly trickles of climate finance.
According to an Oxfam report, the result of these combining economic, climate and COVID crises means that an estimated 12,000 people per day could die from hunger. That is much deadlier than the virus which on its deadliest day recorded 8,890 deaths.
That horrific outcome is not inevitable. Rather governments and finance ministers can still make choices to avert much of those disastrous impacts.
A key to averting these compounding crises is to invest in a global green new deal, which puts debt cancellation at the heart of a global mission to rebuild a more just economy. It must be powered by renewable energy – one of the most affordable, job-creating, economy stimulating ways to invest. And it must also be funded by countries and corporations most responsible for this crisis owning up to their climate and colonial debt.
The G20 Finance Minister meeting will take place on Mandela Day – an annual international day in honour of Nelson Mandela. Those attending would do well to remember Mandela’s words that “like slavery, like apartheid, poverty is not natural. It is manmade and it can be overcome by the actions of human beings”.
The actions that the finance ministers take will determine whether we trap the world’s poorest further into indebted servitude of deepening poverty and inequality. Alternatively, they can help break the shackles of crippling debt and unlock investments in a global green new deal which can ensure a more socially and ecologically just recovery from COVID-19.