Leaders in the United States Congress recently proposed a bill expanding debt relief for impoverished countries, a move hailed by development groups as progress in the fight against global poverty and unfair lending practices to poor nations.
What’s the Story? In mid-December, a bi-partisan group of lawmakers introduced the Jubilee Act in the U.S. House of Representatives. If passed, this bill will broaden debt relief for poor countries, reform the policies of international financial institutions, and press lenders to use responsible practices with respect to the world’s poorest nations …
…The Importance of Debt Relief:
Every year, African nations pay approximately $14 billion in debt remunerations to wealthy nations and international financial institutions while receiving less than $13 billion in international aid. Agreements to cancel or reduce debts have enabled states to spend more on much-needed social programs and translated into a higher quality of life for millions of people in developing countries.
But a lot of other needy countries are still paying off debts, and the money used to pay back lenders is typically rerouted from programs intended to benefit these countries’ least privileged citizens.
According to Jubilee USA, it would only cost 40 cents per American to cancel the debt that 24 impoverished countries owe to the United States, and less than $1 more to cancel the debts of these countries to the World Bank and the International Monetary Fund.
The Jubilee Act for Responsible Lending and Expanded Debt Cancellation passed both the House of Representatives and the Senate Foreign Relations Committee in 2008. But the legislation expired before passing the full Senate. The Jubilee Act of 2009 has been reintroduced in the House and the legislation is expected to come to the Senate floor in early 2010.
In addition to expanded debt cancellation for impoverished countries, the bill seeks to reform the lending policies of governments and international financial institutions to increase responsibility and transparency. The bill would also mandate an audit of existing debts to examine unfair lending policies and companies that profit off the debt of poor countries, known as vulture funds.
Vulture Funds Case Study: Liberia: … //
… Taking Action: Change, Not Chains:
Advocacy groups dismayed by the outcome for Liberia insist on the need to pass the Jubilee Act and other pending legislation, notably the Stop VULTURE Funds Act. This bill, introduced last June, would protect impoverished countries and require greater transparency by creditors suing these nations.
The Jubilee USA Network has started the Change, Not Chains Campaign to urge the Obama administration to support expanded debt cancellation. Without debt payments hanging over their heads, poor countries will have a better change to fight poverty and improve the lives of their people.
The campaign Web site states: “It is time for global change — time for a global economy that works for all. It is time to once and for all break the chains of international debt to fight poverty and injustice” … (full text).