
To mark the Jubilee Year declared by Pope Francis, Jesuit Missions calls on the UK Government to:
- Stop the debt crisis now by cancelling unjust and unsustainable debts, so that indebted low-income countries can spend money on health, education, youth opportunities and adapting to and mitigating climate change.
- Support a Debt Justice Law to make private lenders take part in debt relief. UK government support for such a law would have a real impact, since 90% of private debt contracts are governed by English law
- Prevent future debt crises by establishing a new, binding, comprehensive debt framework within the United Nations.
Why are we doing this?
1. Debt cancellation
Cancelling debts for low-income countries would free up funding for governments to spend on health and education, replacement of fossil fuels with renewables for energy generation, flood defences, assistance to small-scale farmers to cultivate drought-resistant crops, and other measures to help people deal with the impacts of climate change.
Much of the so-called debt is in any case illegitimate. Over the centuries the behaviour of countries in the Global North has often had a devastating impact on other regions. Exploitation of both people and natural resources has often left a legacy of exploitation and poverty.
Institutions in the Global North then lend money, at interest, to regimes in the Global South which at times lack popular legitimacy. Companies in the Global North continue to profit from a system which favours corporate interests over human rights, and are often abetted by corrupt regimes. Rather than cancelling debts that countries will never be able to repay, financial institutions are prone to ‘restructuring’ the debt, which continues the cycle of indebtedness.
In the document announcing the Church’s Jubilee Year 2025, Spes Non Confundit, section 16 paragraph 2, Pope Francis says: ‘Another heartfelt appeal that I would make in light of the coming Jubilee is directed to the more affluent nations. I ask that they acknowledge the gravity of so many of their past decisions and determine to forgive the debts of countries that will never be able to repay them.
‘More than a question of generosity, this is a matter of justice. It is made all the more serious today by a new form of injustice which we increasingly recognize, namely, that “a true ‘ecological debt’ exists, particularly between the global North and South, connected to commercial imbalances with effects on the environment and the disproportionate use of natural resources by certain countries over long periods of time”. [9]
‘As sacred Scripture teaches, the earth is the Lord’s and all of us dwell in it as “aliens and tenants” (Leviticus 25:23). If we really wish to prepare a path to peace in our world, let us commit ourselves to remedying the remote causes of injustice, settling unjust and unpayable debts, and feeding the hungry.’
2. Debt justice law
At the COP29 climate talks last November, the Holy See delegation made plain the Pope’s view that it is the wealthy industrialised countries that owe an ecological debt to the world’s poor, rather than the poor owing the rich for money loaned to them.
The injustice of the global debt crisis is worsened by the fact that so much of the Global South’s ‘debt’ – 60% – is now ‘owed’ to private lenders, who ‘bought’ a lot of debt owed to Global North governments after the 2008 financial crisis. These private lenders, including traders, hedge funds, institutional investors and banks, now charge extortionate rates of interest.
According to the Catholic Church’s global development alliance Caritas Internationalis, more than half of the world’s low-income countries are at or near the point of ‘debt distress, where they cannot meet their repayments. There are more than 3.3 billion people living in 48 low-income countries which are having to pay more on debt interest (just the interest!) than on health or education. Governments of these countries have to pay interest rates 2 to 12 times higher than the rates that governments of wealthy countries pay. In 2023, countries in the Global South spent 12.5 times more on debt servicing than on tackling climate change. Rich countries spent six times more subsidising fossil fuels over 12 years than they did on international climate finance for vulnerable nations. These subsidies could fund nearly half the financing gap needed to support climate-vulnerable countries. (See ‘10 key fact about the current debt crisis’ in the Caritas downloadable campaign pack).
According to CAFOD, almost 90% of debt contracts of the poorest countries are governed by English law because of the influential role of the City of London in the global financial sector. This means the UK ultimately oversees how these debts are enforced. The British government could introduce legislation to make private lenders take part in debt relief. At present, these lenders refuse to participate in periodic initiatives by multilateral lenders like the World Bank and the IMF to reduce or even cancel debt.
3. A new debt framework within the United Nations
We need to address the huge power imbalance between wealthy money lenders and the people of the world’s poorer countries. A global agreement on debt, overseen by the United Nations, would be the best way to do this. The ecological debt owed by the world’s rich industrialised countries to the world’s poorer ‘developing’ countries needs to be paid. Any loans taken out by lower income countries need to be agreed openly on equitable terms and without excessive levels of interest. A public register of lenders and loans would make lenders less likely to seek unjust profits. This is something that Catholic agencies in England, Scotland and across the world are calling for.