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MPs urged to cancel debts to avoid ‘catastrophic’ post-Covid legacy

29 January 2021

MPs call for action to save poor countries from ‘time bomb’

PA

A medical worker marks a child’s finger after giving her a dose of polio vaccine in Sanaa, Yemen, in November. The UK’s International Development Committee have reported that routine vaccinations for measles, polio, and tuberculosis in the world’s poorest countries have stalled due to the global pandemic

A medical worker marks a child’s finger after giving her a dose of polio vaccine in Sanaa, Yemen, in November. The UK’s International Development Comm...

DEBTS amounting to billions of pounds owed by poorer countries should be cancelled outright to avoid the “looming financial tsunami” sparked by the coronavirus pandemic, MPs have warned.

Although about £3.6 billion in debts were suspended last year, more than 70 countries are still trying to pay off £24 billion in debts, most of which would fall under the jurisdiction of the UK courts if they were to default.

MPs on the international development committee urged the Government to consider debt cancellation outright rather than suspension, and also to do more to persuade private lenders — who own 27 per cent of all the debt of poorer countries — to join the debt-suspension scheme.

A new report from the committee warned that the financial legacy of the pandemic could be more catastrophic than the direct impact of Covid-19 in many countries.

The report catalogues the healthcare crisis in poorer countries, where services are “grinding to a halt”, it says. Routine vaccinations for measles, polio, and tuberculosis have stalled, and 11.5 million people are affected by disruption to their supplies of anti-retrovirals for treating HIV/AIDS.

The pandemic has affected girls more adversely than boys: many have dropped out of school early, and been forced into child marriages; others have been subjected to violence behind closed doors.

For many people, starvation is more of a risk than the virus, as millions have lost work. The World Health Organisation has suggested that almost half the global workforce of 3.3 billion people are at risk of losing their jobs as a result of the pandemic.

The Labour MP Sarah Champion, who chairs the international development committee, said that problems had been building during the pandemic and were a “ticking time-bomb”.

“Vulnerable communities have been fighting humanitarian injustices for too long — from poor healthcare to gender inequality, malnutrition to dire financial woes — and these have all been getting worse due to the pandemic. . . Crippling national debt is diverting funding away from crucial social services; treatment for HIV/AIDS has been disrupted; and the interruption of other inoculation programmes is a ticking bomb.

“We must expose this shadow pandemic and recognise that, long after coronavirus, the secondary impacts could be worse. The Government needs to show leadership on this and commit to shore up our decades of investment in development.”

Last autumn, the Government merged the Department for International Development into the Foreign Office, and announced that it would temporarily reduce the amount that it spends on overseas aid from 0.7 per cent of the country’s gross national income to 0.5 per cent (News, 27 November).

The cut in aid to 0.5 per cent has compounded the crisis facing poorer countries: established aid programmes have been thrown into uncertainty, the international development committee says.

Ms Champion reported that British diplomats had been instructed to find at least 50-per-cent cuts in overseas aid before the next financial year. She said that she had “no doubt lives would be lost as a consequence”.

The Foreign Secretary, Dominic Raab, appeared before the committee on Tuesday; but he gave no detail of which areas of aid work would be cut in order to make the savings; and he was unable to say when the 0.7 per cent target might be restored.

The Jubilee Debt Campaign welcomed the committee’s report. Its director, Sarah-Jayne Clifton, said: “Covid-19 has accelerated and deepened the global South debt crisis. Developing countries are spending $92 million a day on debt payments — money which they desperately need to fight the pandemic.

“The UK Government is uniquely placed to take action on this issue as hosts of the G7 this year. The Government must use this moment to unlock multilateral action to tackle the Covid-19 debt crisis, and, most importantly, take action to ensure cancellation of debt owed to private lenders. It’s already clear that private lenders won’t cancel debts when they are asked to do so voluntarily.”

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