More than 100 global organisations are calling for debt payments of developing countries to be dropped this year.
These countries include the world’s poorest economies which are struggling with the impacts of the coronavirus.
Major charities including Oxfam and ActionAid International are asking for the debt relief, which would free up more than $25bn (£20bn) this year.
They have written to world leaders and major central banks calling for a range of debt relief measures.
The call is being spearheaded by UK-based charity Jubilee Debt Campaign and comes a day before a meeting of the G20 group of the world’s largest and fastest-growing economies.
“Developing countries are being hit by an unprecedented economic shock, and at the same time face an urgent health emergency,” said Sarah-Jayne Clifton, director of the Jubilee Debt Campaign.
“The suspension on debt payments called for by the IMF and World Bank saves money now, but kicks the can down the road and avoids actually dealing with the problem of spiralling debts.”
The campaigners want debt payments to be cancelled with immediate effect, including payments to private creditors.
“This is the fastest way to keep money in countries to use in responding to Covid-19, and to ensure public money is not wasted bailing out the profits of rich private speculators,” added Ms Clifton.
Calculations from non-profit network Eurodad show that 69 of the world’s poorest countries are due to pay $19.5bn to other governments and multilateral institutions, and $6bn to external private lenders this year.
The International Monetary Fund (IMF) has made $50bn available in emergency financing while the World Bank has approved a $14bn response package to the most vulnerable economies. The IMF wants to target the money at countries with weak health systems to help them respond to the epidemic.
Meanwhile, the World Bank’s funding is aimed at both supporting the health and financial impact of the virus. These will include low-cost loans, grants and technical assistance.
During the coronavirus pandemic, campaigners want debt relief to be applied for all countries in need, and most urgently for the poorest countries. Looking more long-term, they want a process to reduce debts to a sustainable level after the crisis.
This involves asking the IMF to introduce clear guidelines on when a debt is unsustainable, and follow its policy only to lend to countries with unsustainable debts if there is a default or debt restructuring plan in place.
In a blog on Monday, the IMF said the pandemic had pushed the world into a recession. “For 2020 it will be worse than the global financial crisis. The economic damage is mounting across all countries, tracking the sharp rise in new infections and containment measures put in place by governments”.
