Washington DC - Puerto Rico's Catholic Archbishop and an Evangelical leader who heads the island's bible society criticized a debt agreement and ongoing debt negotiations. "We are strongly opposed to the COFINA debt deal," wrote the religious leaders in a statement referencing a recently approved plan on a type of debt backed by sales taxes. The plan was approved by Puerto Rico's government and oversight board and covers about $17 billion of the total $72 billion debt of the US Territory. A year ago, Puerto Rico was decimated by two hurricanes.      

"Before the hurricanes, we wrestled with the fact that nearly 60% of our children lived in poverty. After the hurricanes great suffering persists across Puerto Rico. Yet, now we see debt deals that are worse than what was proposed before the hurricanes," wrote Archbishop Roberto Gonzalez and Puerto Rico Bible Society General Secretary, Reverend Heriberto Martinez. "If the government of Puerto Rico and the oversight board cannot reach debt deals with a high enough debt cut to put Puerto Rico on a sustainable path for growth, they should immediately step aside and allow the bankruptcy process approved by Congress in 2016 to arbitrate this immoral debt burden that weighs upon our people, especially on our children."

The leaders also took aim at negotiations around the General Obligation debt and expressed concern if a similar deal was reached, Puerto Rico would be restructuring their "debt in a few years time." The leaders also raised concerns about a fiscal plan approved by the oversight board.

"The current fiscal plan and ongoing debt negotiations are not doing enough to address child poverty, limit austerity and promote sustainable economic growth," stated Eric LeCompte who advises the religious leaders and is the director of the religious development group Jubilee USA.

"but with righteousness he shall judge the poor,
    and decide with equity for the meek of the earth; 
and he shall smite the earth with the rod of his mouth, 
and with the breath of his lips he shall slay the wicked." 
- Isaiah 11:3-4

Since 2015, we have called for Puerto Rico's debt to be restructured in ways that diminish austerity, reduces our island's high child poverty levels and creates sustainable economic growth. With our religious partners from the US, Puerto Rico and Jubilee USA, we repeated this call to our government, Puerto Rico's oversight board and the government of the United States. 

Before Hurricanes Irma and Maria, fiscal plans proposed debt payment cuts of more than 80%. 

We are surprised, extraordinarily, by agreements negotiated between the oversight board and some bondholders that cut the debt at much lower levels. Before the hurricanes, we wrestled with the fact that nearly 60% of our children lived in poverty. After the hurricanes great suffering persists across Puerto Rico. Yet, now we see debt deals that are worse than what was proposed before the hurricanes.

We are deeply opposed to the COFINA debt deal. We are concerned by the actions of our government, the debt holders and Puerto Rico's oversight board. Our people, especially our children who will shoulder this debt into the future, deserve better deals.

Ultimately, the current COFINA debt deal is based on rosy, overly optimistic, short-term economic projections. If a similar deal is reached with other debt groups like the General Obligation bond holders, we will be seeking to restructure Puerto Rico's debt in just a few years time.

Current debt negotiations fail to take into account addressing child poverty, reducing austerity and ensuring robust economic growth.

The most recently approved fiscal plan projects a budget surplus. As the oversight board and our government works towards a plan of adjustment, we believe it is morally unacceptable to use that projected budget surplus to pay Puerto Rico's debt. The plan of adjustment must use that surplus for hurricane recovery, child poverty reduction, limiting austerity and supporting long-term economic growth.

If the government of Puerto Rico and the oversight board cannot reach debt deals with a high enough debt cut to put Puerto Rico on a sustainable path for growth, they should immediately step aside and allow the bankruptcy process approved by Congress in 2016 to arbitrate this immoral debt burden that weighs upon our people, especially on our children.

Mons. Roberto O. González Nieves OFM
Metropolitan Archbishop of the Roman Catholic Archdiocese of San Juan de Puerto Rico

Reverend Heriberto Martínez Rivera
General Secretary
The Bible Society of Puerto Rico
Coordinator
Ecumenical and Interfaith Coalition of Puerto Rico 

Washington DC - According to a report from Axios, President Trump told advisers that additional hurricane relief monies should not be sent to Puerto Rico as the monies could be used to pay the island's debt.

"We are concerned that hurricane relief monies are providing a budget surplus that can pay Puerto Rico's debt," noted Eric LeCompte, Executive Director of the religious debt relief group, Jubilee USA. "A great concern is that the oversight board of Puerto Rico approved a recent fiscal plan with projected budget surpluses based on current and expected hurricane relief monies. Without Congress action, this budget surplus could be used to pay debt."

Since early 2018 Congress and federal relief agencies passed nearly $40 billion in hurricane relief and health-care funding for Puerto Rico. Puerto Rico's government and oversight board estimate this is about a third of the total needed for aid and rebuilding efforts.

"The reality is that Puerto Rico needs more relief aid, but that aid shouldn't create a budget surplus that can be used to pay the debt," said LeCompte, who serves as an expert to United Nation agencies on debt policies. "There is a simple fix. Congress needs to act and fence off current and future hurricane relief monies for the sole purpose of recovery and not allow a penny to be used for debt payments."

Implementing Debt, Tax, Trade and Transparency Policies that Protect the Vulnerable, Promote Development and Address Inequality

The Intergovernmental Group of Experts on Financing for Development, United Nations Conference on Trade and Development (UNCTAD)

United Nations
Geneva, Switzerland

Eric LeCompte, Executive Director of Jubilee USA
November 9th, 2018
Remarks As Prepared for Delivery

I want to extend my gratitude to all of the organizers of the Intergovernmental Group of Experts on Financing for Development and UNCTAD for convening these critical UN meetings. In particular, in light of recent reports from the International Monetary Fund and UNCTAD that warn of another financial crisis, we cannot forget that UNCTAD was one of only a few bodies that foresaw the last global financial crisis of 2008.

As concerns grow that not enough has been done to prevent another financial crisis and we are seeing rising debt vulnerabilities in Africa and throughout the developing world, the timing of these meetings is incredible. I associate my remarks today with the insightful November 7th statement of the Holy See.

In today’s UN forum we are tasked with responding to the following issues: mitigating debt vulnerabilities, utilizing debt financing to promote sustainable development, promoting responsible finance and improving existing policies to resolve debt and financial crisis.

My organization, Jubilee USA Network is well positioned to respond to these issues because of our unique history in creating and supporting policies that successfully resolve unsustainable debts, prevent financial crisis and diminish poverty.

Jubilee USA is part of the broader community of global organizations that coalesced around resolving debt crisis in the poorest countries of the world over 20 years ago. Jubilee USA moves forward global policies that address the root causes of poverty and inequality related to debt, tax, trade and transparency issues. In the United States, Jubilee USA’s founders and members include the US Conference of Catholic Bishops, American Jewish World Service, Islamic Relief, the United Church of Christ and most mainline Christian Churches. Congressional Quarterly cites the work of Jubilee USA as some of the last truly bipartisan efforts in the United States.

In the 1990’s we began our work together to address inequality and finance development by addressing the global debt crisis. Together we won two great debt relief and financing initiatives to address global poverty and promote children’s education and health: The Heavily Indebted Poor Country Initiative (HIPC) and the Multilateral Debt Relief Initiative (MDRI). Because of these initiatives, over $115 billion was won in debt relief to benefit some of the world’s poorest countries. Because of that debt relief we know in sub-Saharan Africa that more than 52 million kids went to school who never would have seen the inside of a classroom. We know that school fees were cancelled, hospitals were opened, because of this historic initiative, because of this relief and the international accountability laws that we won, all of this money had to go into building social infrastructure. World Bank President Jim Kim cites debt relief as one of the two reasons we see sustained economic growth in some countries across Africa.

It was out of these initiatives that concepts around achieving debt sustainability were born.

Unfortunately, as successful and important as HIPC and MDRI were, we now realize that those solutions were not enough to entirely address the problem. Out of the 38 very poor countries that benefited from the HIPC and MDRI initiatives, 31 again face debt distress, financial crisis or unsustainable debts. 31 out of 38.

But not only has that crisis impacted and returned to some of the world’s poorest countries, we have also seen it impacting middle-income and even developed countries. From 2009 to 2014, debt service in Africa nearly doubled. While at the same time in the same countries in Africa, we saw spending on health care decline. This year the IMF released a new report acknowledging that serious debt crisis is facing countries across Africa. We are concerned that nearly 20 African countries are showing worrying signs of crisis or impending crisis. We are currently seeing a tragic situation on Small Island Developing States or SIDS across the world, many of these islands with poverty rates that range from 30% to 50%. These so called Middle-Income Small Islands are now facing crisis, just as so-called middle-income countries in Africa are facing similar crises.

These new crises have become more complicated. Debt itself has changed and the instruments of debt have changed. Where 20 years ago, debt was relatively quarantined to a rather small group of lending facilities, international financial institutions, governments and bonds - now we see more complicated instruments and a broader array of types of credit and debt. These concerns are interrelated with the reality that many developing countries across Africa are much more vulnerable to any new global financial crisis.

With this new reality and this lack of debt sustainability there is a small group of exploitative hedge funds that are trying to benefit from countries wrestling with financial crisis. These so called “vulture funds” are responsible for predatory behavior in Detroit, in Greece, in Argentina and were recently stopped in Puerto Rico by an act of the US Congress. So called “vulture funds” buy debt for pennies on the dollar and then sue in full using aggressive litigation tactics to collect the full amount. These types of funds have successfully collected aid monies that were intended to provide development financing in the developing world. Some of the victims of this behavior sit here in this room.

In response to the challenges that “vulture funds” continue to pose, one can not underestimate the leadership of the US Government in two areas. In 2016 Congress and the White House moved into law the first anti-vulture fund legislation from the US Government to protect Puerto Rico from these predatory actors.

Second, we cannot forget how these predatory vulture funds have successfully used some of the nearly 2000 trade Investor-State Dispute Settlement or global ISDS processes to collect on old bad debt. In the new NAFTA negotiations in the United States, Mexico and Canada, we are seeing these processes being severely limited and a final agreement should prevent this small group of hedge funds from exploiting these trade dispute processes.

In 2016 and 2017 the IMF and World Bank reviewed their sustainability framework. This framework offers a lot of valuable information and pulls together much needed analytical data. Debt sustainability frameworks need to be discussed in relation to strengthening global policies on debt restructuring and responsible lending and borrowing. Further debt sustainability analysis could be strengthened by ensuring they take into account issues such as development, improving flexibility to reevaluate after external shocks and reviewing fiscal targets to ensure that tax evasion and corruption are curbed.

We and the religious organizations that we represent and work with around the world, believe very much that debt sustainability works hand in hand with public budget transparency and responsible lending and borrowing. Beyond preventing predatory financial behavior, public budget transparency and responsible lending and borrowing can provide financing of billions of dollars annually for the developing world. Both in the monitoring of debt levels and in the financing for development, these issues cannot be separated from debt sustainability.

These concepts are reiterated in the very promising recent work of the G20 which the US Government and G20 endorsed last summer: the Operational Guidelines for Sustainable Development. We are now in an implementation phase on these efforts. This work compliments the strong consensus building work over the last 7 years with UNCTAD’s efforts on responsible lending and borrowing.

These conservative stewardship policies cost nothing and can raise billions in the developing world.

Further it’s why we support improved debt restructuring at the International Monetary Fund. It is why we supported the United Nations General Assembly process to create a legal global bankruptcy framework. Similar to Chapter 9 or Chapter 11 in the United States, global bankruptcy can provide the same kind of stability we rely on in domestic economies into the global financial system. Pope Francis supports such a system to provide financing to end poverty. Adam Smith the father of modern economics believed global bankruptcy is critical for global stability. We believe that a country’s debt can be called sustainable after the debt is adequately restructured.

Public budget transparency, responsible lending and borrowing and stronger restructuring regimes must be moved forward urgently to prevent or mitigate the next financial crisis.

In terms of issues around development, we must take into account the reality that poor populations and vulnerable communities often do not have their needs met when even “sustainable” debts are paid. There needs to be a greater effort in analyzing the sustainability of a debt when the basic needs and economic rights of people are not met.

Next, external shocks can immediately change the debt dynamics of an economy. Antigua and Barbuda, Dominica and so many Caribbean islands were decimated by hurricanes last year. Our partners in Dominica can testify to this reality. It is imperative to move forward proposals that can restructure debt when countries face shocks or natural disasters. We see the success of proposals like this, when debt relief was successfully used as a crisis response tool for the three African countries hit by the Ebola epidemic.

When disaster strikes, when famine spreads and when economic crisis impacts the poor, we need to be able to reevaluate these situations. In line with our previous thoughts on improving debt restructuring and looking at Chapter 9/11 styles of bankruptcy – it seems the Caribbean would be a perfect candidate for a regional Caribbean initiative. This post HIPC initiative, could be a regional initiative with the high debt distress many Caribbean countries are experiencing. It can utilize the principles of bankruptcy for a regional Caribbean mechanism.

Finally, debt sustainability also must rely on improved fiscal policies that curb tax evasion and corruption. Standards must be set that provide targets to governments to curb illicit financial flows, tax evasion, corruption and corporate and professional tax avoidance. We also acknowledge the growing issues around tax evasion, illicit financial flows, anonymous shell companies and corporate tax avoidance. As the President Mbeki report noted, one of the greatest diversions of financing for human needs is because of tax evasion and corruption. Last year the UN Conference on Trade and Development (UNCTAD) released a study on five countries that showed how much money they were losing because of “trade mis-invoicing.” Currently we believe that 80% of all illicit financial flows are because of trade mis-invoicing at borders and port authorities. This is actually a relatively easy problem to tackle, and this particular problem if tackled could secure more than $1 trillion a year to provide financing and support economic growth in the developing world. Addressing corruption, tax evasion, corporate tax avoidance, anonymous shell companies and related issues should be addressed. When countries fall short on revenue they too often turn to austerity and more borrowing to meet budget demands.

In closing, to promote development and prevent financial crisis we need to promote stronger policies on trade dispute mechanisms, public budget transparency, responsible lending and borrowing, development protections, improved debt restructuring and fiscal policies that curb tax evasion and corruption.

Thank you.

Sponsored by Jubilee USA Network

WHAT: During the negotiations for a new "NAFTA," religious organizations issued a statement encouraging that trade agreements ensure access to medicine for vulnerable communities around the world and in the United States. Signers of the statement included the heads of the Presbyterian, Methodist, Lutheran, Catholic, Episcopalian and United Church of Christ Churches and interfaith development group Jubilee USA. In this panel, experts and representatives from religious institutions will discuss ways to improve NAFTA, enforce bipartisan Congress agreements on trade protections for vulnerable communities and explore policies related to prescription drug costs.

WHO: Reverend Stacy Martin, President and CEO, Lutheran Family Services of Nebraska; Anthony Granado, Director, Office of Domestic Social Development, United States Conference of Catholic Bishops; Fran Quigley, Clinical Professor of Law, University of Indiana; Eric LeCompte, Executive Director, Jubilee USA Network

WHEN: 4:00 - 4:30 PM Reception and Open Bar
4:30 - 5:30 PM Speeches
5:30 PM Reception
November 7, 2018

WHERE: US Congress Rayburn House Office Building
House Small Business Committee Hearing Room 2361
Washington, DC

Business Attire. This is a "widely attended" event for Congressional Staff.

To RSVP please contact Iuliia Ponomareva at development@jubileeusa.org or call (202) 783-3566 x100.

Washington DC – La Junta de Supervisión Fiscal de Puerto Rico revisó hoy en San Juan un nuevo plan fiscal, con particular énfasis sobre el desarrollo económico y los pagos de deuda para los acreedores. La Junta de Supervisión Fiscal y de Gerencia de Puerto Rico fue nombrada mediante legislación, aprobada por el Congreso de EE.UU. en el 2016, a tenor con que el territorio federal, alcanzara presupuestos balanceados, esto en medio de la lucha provocada por la crisis de la deuda, que reflejaba un saldo de $72,000 millones.

“El nuevo plan fiscal está fundamentado sobre estimados de crecimiento optimistas a corto plazo y depende de la aprobación por el Congreso de decenas de miles de millones de dólares adicionales, producto de las ayudas por los desastres naturales y beneficios de salud,” apuntó el Director Ejecutivo de Jubilee USA Eric LeCompte. “Mientras que necesitamos ver mas ayuda dirigida hacia Puerto Rico, los recién aprobados acuerdos de deuda y el plan fiscal están pagando demasiado a los acreedores, lo que su vez provoca un incremento en las medidas de austeridad.”

Los líderes religiosos en la isla tienen la preocupación de, que el plan fiscal no vaya acorde con la realidad del país. Antes de que los huracanes Irma y María azotarán a Puerto Rico el año pasado, la isla luchaba contra una tasa de pobreza infantil que rondaba el 60 por ciento. 

“Mientras los mercados celebran por el reflejo de un crecimiento económico temporal y los esfuerzos de la reconstrucción, vemos todavía a nuestra gente, en especial a los niños, sufriendo.” comento el Arzobispo de San Juan, Roberto González Nieves. “Nosotros necesitamos encaminarnos por un sendero que provea desarrollo sustentable a largo plazo para nuestra economía, nuestra gente y nuestro medio ambiente.”

En el reciente acuerdo de deuda sobre los bonos de Puerto Rico respaldados por el Impuesto de Ventas y Uso o COFINA, tenemos la preocupación de que el modelo utilizado provee un pago muy alto para los acreedores.

“Nuestra primera prioridad debe ser reducir las medidas de austeridad y encontrar un camino de desarrollo económico sustentable,” comentó el Rev. Heriberto Martínez, quien es el líder evangélico que dirige la Sociedad Bíblica en la isla, y a su vez dirige una coalición religiosa sobre la deuda de Puerto Rico. “Nuestra gente necesita un proceso de restructuración comprensivo sobre la totalidad de la deuda, de modo que nuestros niños queden liberados de este problema.”

Leer el Nuevo Plan Fiscal para Puerto Rico.

Oversight Board Reviews New Fiscal Plan for Puerto Rico

Washington DC - Puerto Rico's oversight board reviews a new plan on economic growth and debt payments to the island's creditors in San Juan today. The Financial Oversight and Management Board for Puerto Rico was appointed through an act of Congress in 2016 to bring balanced budgets to the US territory wrestling with a $72 billion debt crisis.

"The new fiscal plan is based on rosy short-term growth estimates and relies on Congress to fund tens of billions more in disaster aid and health benefits," noted Jubilee USA Executive Director Eric LeCompte. "While we need to see more aid getting to Puerto Rico, the current approved debt deals and fiscal plan are paying too much to creditors and pushing too much austerity."

On the island, religious leaders are concerned that the fiscal plan doesn't match the reality of life on the ground. Before Hurricanes Maria and Irma hit Puerto Rico last year, the island struggled with a close to 60 percent child poverty rate.

"While markets celebrate over temporary economic growth from aid and rebuilding efforts we still see our people, especially our children suffering," stated San Juan's Catholic Archbishop Roberto Gonzalez. "We need a path forward that provides long-term sustainability for our economy, our people and our environment."

In a recent debt plan over Puerto Rico sales tax backed bonds or COFINA, concerns remain that a debt payment model is being set that pays too much to creditors.

"Our first priority must be reducing austerity and finding a path to sustainable economic growth," stated Reverend Heriberto Martinez who is the Evangelical head of the island's General Bible Society and leads a religious coalition on Puerto Rico's debt. "Our people need a comprehensive and total debt restructuring so our children can be free of this problem."

Read the New Fiscal Plan for Puerto Rico

Washington DC - Puerto Rico's oversight board reviews a new plan on economic growth and debt payments to the island's creditors in San Juan today. The Financial Oversight and Management Board for Puerto Rico was appointed through an act of Congress in 2016 to bring balanced budgets to the US territory wrestling with a $72 billion debt crisis.

"The new fiscal plan is based on rosy short-term growth estimates and relies on Congress to fund tens of billions more in disaster aid and health benefits," noted Jubilee USA Executive Director Eric LeCompte. "While we need to see more aid getting to Puerto Rico, the current approved debt deals and fiscal plan are paying too much to creditors and pushing too much austerity."

On the island, religious leaders are concerned that the fiscal plan doesn't match the reality of life on the ground. Before Hurricanes Maria and Irma hit Puerto Rico last year, the island struggled with a close to 60 percent child poverty rate.

"While markets celebrate over temporary economic growth from aid and rebuilding efforts we still see our people, especially our children suffering," stated San Juan's Catholic Archbishop Roberto Gonzalez. "We need a path forward that provides long-term sustainability for our economy, our people and our environment."

In a recent debt plan over Puerto Rico sales tax backed bonds or COFINA, concerns remain that a debt payment model is being set that pays too much to creditors.

"Our first priority must be reducing austerity and finding a path to sustainable economic growth," stated Reverend Heriberto Martinez who is the Evangelical head of the island's General Bible Society and leads a religious coalition on Puerto Rico's debt. "Our people need a comprehensive and total debt restructuring so our children can be free of this problem."

Read the New Fiscal Plan for Puerto Rico

Eric LeCompte, Executive Director of Jubilee USA, recently spoke with Global Capital on growing debt burdens in Africa. Read excerpt below and follow link to full article.

Debt-laden African states ill-prepared for next crisis

Eric LeCompte, executive director of Jubilee USA Network, said African markets were now much more connected to the rest of the world than during the previous financial crisis.

"The types of debt that different countries have today did not even exist in Africa 10 years ago. Africa will not be insulated from the next crisis," he said. "The poorest countries are already back in debt, and now we even see wealthier countries like Nigeria, Kenya which are dealing with serious debt issues."

Read more here. 

Bali, Indonesia - At the annual IMF and World Bank Meetings, the IMFC released the "Communiqué of the Thirty-Seventh Meeting of the International Monetary and Financial Committee." 

Eric LeCompte Jubilee USA Executive Director releases of the following statement on the International Monetary and Financial Committee Communiqué:

"I share the concern of IMF leadership about future financial crisis. We have not done enough to prevent the next crisis.

"While we have reached consensus that risky behavior and unsustainable debt leads to financial crisis, I am concerned that we have still not reached consensus on the solutions of financial crisis.

"Inequality is on the rise. Risks to the stability of the financial system are growing according to the IMF.

"To prevent the next crisis, we need greater transparency. We must curb corruption and tax evasion and we need a permanent process that can solve debt crisis."