IMF Warns of Economic Challenges as Pandemic Persists

Development Group Releases Statement

Washington DC –The IMF released its World Economic Outlook Update forecasting a global economic downgrade and persisting challenges to the global economy.

Eric LeCompte, Executive Director of the religious development group Jubilee USA Network and a United Nations finance expert releases the following statement on the IMF World Economic Outlook Update:

"As the pandemic continues the IMF again has downgraded its outlook on the global economy.

“The big story emerging from the IMF’s report is that variants like Omicron will continue to disrupt the global economy.

"Both China and the United States face growing challenges and slower growth.

"The report highlights that less stimulus and no Build Back Better legislation not only negatively impacts the US economy, it also hurts the world economy.

"The biggest concern for global growth remains the emergence of new COVID variants.

"There is a direct correlation to new coronavirus variants with supply chain shocks, shortages and higher inflation.

"Rising food prices and higher import prices are impacting developing countries and increasing poverty.

"Many developing countries are facing prolonged crisis as they lose revenue and wrestle with debts they cannot pay.

“With interest rates rising in major economies, it means that developing countries will face higher debt payments. Debt relief for developing countries is needed as quickly as possible.

"We need to increase access to vaccinations and stimulus for developing countries as the crisis worsens in too many of these countries.

"The IMF continues to highlight the risks of climate change and urges action to stop the long-term economic risks that countries face beyond the pandemic."

Read the IMF's World Economic Outlook Update here.

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El Nuevo Dia Quotes Eric LeCompte on Puerto Rico Adjustment Plan

El Nuevo Dia quoted Eric LeCompte in an article about the Puerto Rico Adjustment Plan. Read the article here.

They fear that the Adjustment Plan will impose “unsustainable payments” on the central government of Puerto Rico

The Power4PuertoRico coalition affirmed today, Wednesday, that the central government's Adjustment Plan imposes on the island government "unsustainable payments for decades with few or no reforms to improve service delivery."

Meanwhile, the Jubilee USA network indicated that they remain "concerned about some of the assumptions of the debt agreement." “The island's ability to resume growth and avoid cuts in anti-poverty programs are of primary concern,” said Eric LeCompte, executive director of JubileeUSA.

For LeCompte, "although there is room for optimism, only time can tell if the debt cuts were deep enough to prevent Puerto Rico from needing another debt restructuring in a few years."

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Common Dreams Quotes Eric LeCompte on Puerto Rico Debt Plan

Common Dreams quoted Eric LeCompte in an article regarding the Puerto Rico Debt Plan. Read an excerpt and the full article here.

Critics Warn Puerto Rico Debt Plan Will Lead to More Austerity

By Julia Conley

Progressives and anti-austerity campaigners on Wednesday were wary of a federal judge's ruling which wiped out 80% of Puerto Rico's debt—the product of four years of negotiations between the U.S. territory's government, creditors, and a fiscal control board that Puerto Ricans derisively call "la junta."

Executive Director Eric LeCompte comments "We remain concerned by some of the assumptions of the debt deal. The island's ability to resume growth and avoid cuts in anti-poverty programs are both chief concerns".

Puerto Rico's debt exceeded $70 billion and it owed $55 billion in unfunded pensions when it entered bankruptcy in 2017. Its debts were partially brought on by decades of lost tax revenue after the U.S. Congress repealed a tax break for businesses on the island in 1976.

Jubilee USA said while "there is room for optimism, only time can tell if the debt cuts were deep enough to prevent Puerto Rico from needing another debt restructuring in a few years."

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World Economic Forum Grapples with Pandemic-Troubled Global Economy

Washington DC –Against the backdrop of pandemic-caused economic shocks and social disruptions, the World Economic Forum hosts world and business leaders for its annual meeting. Headquartered in Davos, Switzerland the mission of the forum is to foster global economic cooperation. The January 17th through 21st meetings take place virtually for the second year in a row.

“As new virus variants emerge, the global economy faces increasing uncertainty," noted Eric LeCompte, a United Nations finance expert and Executive Director of the religious development group Jubilee USA Network. Jubilee USA Network monitors the work of the World Economic Forum. “Inflation, supply chain disruptions, growing social discontent and the lack of recovery in developing countries are all big concerns at this year's forum."

The World Bank projects half of developing countries will spend less in 2023 than they did in 2019. On January 1st, 46 countries benefiting from a G20 pandemic-related debt payment suspension initiative had to resume debt payments.

"Developing countries are struggling with rising debt levels and revenue loss," stated LeCompte. "With no certain recovery in sight, parts of the private sector are wrestling with economic losses during the Davos meetings."

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Puerto Rico Bankruptcy Process Ends

Washington DC –The judge in charge of Puerto Rico's bankruptcy, Laura Taylor Swain approved a debt restructuring settling $35 billion in debt. Negotiations involved the island's government, its creditors and a federal oversight body over the past four years.

“Puerto Rico's debt payments are now reduced by two-thirds,” said Eric LeCompte, Executive Director of Jubilee USA Network. With Puerto Rico religious leaders, Jubilee USA advocated for debt and disaster relief for the island since 2015. “We remain concerned by some of the assumptions of the debt deal. The island’s ability to resume growth and avoid cuts in anti-poverty programs are both chief concerns."

The $35 billion Puerto Rico debt deal means that bondholders receive $7 billion in cash and other benefits.

“While there is room for optimism, only time can tell if the debt cuts were deep enough to prevent Puerto Rico from needing another debt restructuring in a few years,” cautioned LeCompte. 

An act of Congress put in place a federal oversight board in 2016 that worked on the bankruptcy process. The oversight board remains on the island until Puerto Rico can show four years of balanced budgets.

Available for interview: Eric LeCompte, Executive Director
Contact: Mizraim Belman Guerrero, Communications and Outreach Director
[email protected] / (202) 430-6975

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IMF Discusses $30 to $50 Billion Pandemic and Climate Response Process for Developing Countries

Washington DC – On Friday, the International Monetary Fund's Board discusses the proposed "Resilience and Sustainability Trust." The new vehicle could aid developing countries with pandemic response and challenges faced from climate change with low-interest, long-term loans. 

“The IMF proposal is another way that wealthy countries can use their surplus pandemic response funds to support developing countries struggling with the COVID crisis, poverty and climate challenges,” said Eric LeCompte, the Executive Director of the religious development group Jubilee USA Network.

The loans would come from a trust with $30 to $50 billion in assets from the IMF-created reserve funds of wealthy countries, also known as Special Drawing Rights (SDRs).  In August, wealthy countries received more than $400 billion in SDRs that could be used to support this trust and other processes for developing countries. Developing countries received about $230 billion in this relief aid. 

"Developing countries categorized as middle-income economies continue to face some of the worst poverty increases and job losses. Yet these countries are not included in many of the previous pandemic relief processes," noted LeCompte, a United Nations finance expert whose group advocated for SDRs to fight the pandemic. "An important aspect of the new trust is that it could support developing countries left out of previous pandemic processes."

Some donor countries already use their SDRs to support zero-interest loans through the IMF’s Poverty Reduction and Growth Trust, but only the poorest countries are eligible to access it.

Friday's IMF meeting reviews possible economic reforms for developing countries to access loans from the new trust.

“As the health and economic crises persist across developing countries, it would be totally unacceptable if this new process has economic reforms that hurt vulnerable communities or prevent recovery from the crisis," added LeCompte.

The IMF plans to have agreement on basic principles to guide the new trust by their April, Spring meetings.

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Congress COVID Relief, Student Loans, Puerto Rico Aid

Dear Friend,

Thanks to your partnership, Jubilee USA's campaigns on student loans, Puerto Rico and global pandemic aid and debt relief are moving forward. I'm writing to update you on these campaigns and ask you to take urgent action. 

As part of upcoming budget votes, Congress decides on Jubilee USA requests for $22 billion in pandemic response aid and debt relief for developing countries. Please call your Senators and ask them to support pandemic debt relief and aid so vulnerable communities can get through the crisis.

As we continue to move Congress on debt relief and IMF Special Drawing Rights aid, we won new action on student loans from President Biden. In the last days of 2021, Biden extended the pandemic freeze on student loan payments and interest. This happened because of the thousands of messages you sent to Congress and the Biden and Trump White Houses. We continue to work for student debt cancellation for the vulnerable and those facing economic hardship.

The news is not as good for our Puerto Rico efforts. 

We had hoped the Senate would vote in December on action passed for Puerto Rico by the House of Representatives. In the last days of the year, Senate negotiations failed to pass disability payments for 300,000 low-income people, $3.6 billion in healthcare aid and measures to increase jobs for the island. As we push for a Puerto Rico deal in the Senate, your thousands of phone calls are pushing Senators to take action as the island struggles with debt crisis, natural disasters and the pandemic.

Your partnership is critical in the coming months as some of the most consequential decisions on Jubilee USA's pandemic response campaigns will be made by the G20, IMF, G7, World Trade Organization, Congress and White House.

Lack of vaccines and the COVID-spurred health and economic crisis continue to push hundreds of millions into hunger and poverty around the world. Please take action and leave a message for your Senators as they prepare to vote on $22 billion in pandemic debt relief and aid. The Capitol Switchboard is open 7 days a week and 24 hours a day.

Thanks for taking a moment to call your Senators ahead of important budget votes.

In partnership,

Aldo

Aldo Caliari
Senior Director of Policy and Campaigns
Jubilee USA Network
[email protected]
www.jubileeusa.org/support-us

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Biden Extends Student Loan Payment Relief to May

Religious Group Urges Additional Student Debt Relief for Borrowers Facing Pandemic Hardship

Washington DC – In the last days of December, President Biden extended a freeze on student loan repayment until May to assist borrowers amidst the coronavirus crisis. This is the third time that Biden extended executive action began by President Trump to pause federal student loan payments and interest.

“For many struggling borrowers, the canceling of interest and deferring student loan payments is a crucial source of aid,” noted Jubilee USA Network Executive Director Eric LeCompte. “For vulnerable communities and people struggling with the pandemic and economic hardship, we will need to eliminate more of their student debt.”

Jubilee USA Network generated thousands of messages to Congress and the Trump and Biden White Houses urging student debt relief to help confront the economic crisis spurred by the coronavirus. The pause in interest benefits 41 million people. Almost 27 million borrowers have not made payments since the program began.

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IMF Extends Debt Cancellation for Poorest Countries into April

Washington DC – The IMF extends debt payment relief for 25 countries through April 2022. The IMF's Catastrophe Containment and Relief Trust (CCRT) was activated early in the pandemic to provide debt relief and aid for the world's poorest countries. In all, 29 countries received nearly one billion dollars in relief.

“Debt relief remains a critical part of the global pandemic response,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. “Debt relief has helped countries respond to the health and economic crises. More debt relief will be needed for many developing countries.”

The IMF CCRT debt relief process was initially used for disaster-hit Haiti and then three African countries responding to Ebola. As the CCRT provided debt relief since the dawn of the pandemic, after the next phase of relief - CCRT resources will be depleted to $95 million.

“More commitments and donations are essential to provide debt relief for developing countries struggling with the pandemic,” added LeCompte. 

Read the IMF release on the CCRT extension here.

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Donors Announce $93 Billion in COVID and Development Aid for Poorest Countries

Washington DC – A World Bank fund that aids the poorest countries will receive $93 billion over the next three years. The International Development Association (IDA) announcement came Wednesday at the end of a two-day donor pledging meeting in Tokyo.

“As poor countries struggle with the pandemic and high levels of debt, they need more support,” said Eric LeCompte, the Executive Director of the religious development organization Jubilee USA Network. "Religious groups pushed world leaders to increase humanitarian aid for developing countries struggling with the pandemic."

The US Conference of Catholic Bishops and Jubilee USA Network wrote a joint letter to President Biden in February urging additional funds for IDA and other development lenders to respond to increased COVID-spurred needs.

“The committed donations are important as these countries need to spend more on social needs and climate challenges," stated Jubilee USA's Aldo Caliari, the group's Senior Director of Policy.

IDA normally receives new funds every three years. The IDA replenishment is the 20th in its history and was originally scheduled for 2023 but rapid depletion of the previous one due to the COVID crisis, prompted donors to advance new funding by one year. The new IDA commitments were 13% higher than the previous replenishment. The Tokyo meeting was the last of four donor meetings to negotiate contributions.

“More money for IDA is good news,” added LeCompte. "As we continue to confront the global health and economic crises, developing countries will also need debt relief and other sources of aid."

Major US churches and international religious groups also signed a letter that Jubilee USA coordinated to the White House, G20 and IMF calling for additional aid to confront the pandemic. The nearly 300 signers included the Union for Reform Judaism, the Unitarian Universalist Association and the Episcopal, Evangelical Lutheran, Presbyterian, Methodist and United Church of Christ Churches.

Read Jubilee USA and the US Conference of Catholic Bishops joint letter to the White House here.

Read Jubilee USA's COVID response letter calling for additional aid and development bank support with nearly 300 signatories here.

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White House Hosts Democracy Summit and Highlights Global Anti-Corruption Commitments

Treasury Releases Draft Rule Improving Transparency for "Anonymous" Shell Companies

Washington DC – More than 100 leaders showcase initiatives to counter dictatorships, fight corruption and promote human rights at a virtual summit the White House hosts December 9-10. 

“The White House meetings are incredibly important as we must make sure that pandemic relief aid gets to the people who need it most around the world,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. “Democracy and civic participation are powerful forces that can prevent corruption and hold leaders accountable during a crisis."

In advance of the summit, the US released a strategy to counter corruption.

“A critical part of the US anti-corruption strategy is stopping tax evasion and avoidance at home and abroad,” added LeCompte.

The US strategy follows a National Security Study Memorandum that President Biden issued to lead efforts to strengthen transparency for the US and international financial system.

On Wednesday, Treasury released a draft rule to enforce higher transparency in shell companies. The rule comes after Jubilee USA Network worked for more than 10 years on legislation that requires companies to disclose their true owners. The Corporate Transparency Act passed in January and Treasury shared the draft enforcement rule ahead of the White House summit.

“Treasury’s transparency rule takes us closer to ending the use of anonymous shell companies to support corrupt regimes and criminal networks,” shared LeCompte.

Jubilee USA organized nearly 300 religious, human rights, labor and environmental organizations to advocate that the Administration uses its voice in the G20, G7, IMF and United Nations to promote transparency and accountability in COVID crisis relief measures.

“Corruption is always an enemy of poor and vulnerable people," stated LeCompte. "For more than 20 years, we've worked with Republican and Democratic Administrations to strengthen transparency and promote citizen empowerment in the debt relief and aid we've won for developing countries."

The Biden Administration announced a second summit in a year's time to evaluate the implementation of the summit commitments.

Read Treasury's transparency rule here.

Read Jubilee USA's Corporate Transparency Act letter supported by over a hundred groups here.

Read Jubilee USA's COVID-19 White House, IMF, G20 Letter with 286 supporting groups here

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Global Pandemic Aid for Developing Countries is Focus of High-Level Event

Washington DC – On Wednesday, a high-level panel explores the role of IMF emergency currency or Special Drawing Rights in pandemic recovery. The event, Special Drawing Rights and Global Pandemic Recovery, is convened by Jubilee USA Network and features Ambassador Sam Brownback, former US Senator and US Ambassador at Large for International Religious Freedom, Africa Union Ambassador Hilda Suka-Mafudze and President of Bread for the World, Reverend Eugene Cho.

“We need to do more to address the health and economic crises spurred by the coronavirus," shared Jubilee USA Executive Director Eric LeCompte. LeCompte will introduce and moderate the panel. “The event focuses on a type of aid that countries can use for pandemic recovery.”

In August, the IMF issued $650 billion in Special Drawing Rights (SDRs) or emergency currency for countries to address the coronavirus crises. More than $400 billion of the aid went to wealthy economies, with the US receiving $113 billion. Wealthy countries can transfer their unused SDRs to countries in need.

“Already this aid is making a difference for countries responding to the crisis,” added LeCompte. "Wealthy countries can share the SDRs they won't use with developing countries."

The IMF accepts SDRs from countries to finance zero-interest loans for the poorest countries. Another IMF vehicle under development will accept SDR contributions to assist developing small states and vulnerable middle-income countries. Recent research released by Jubilee USA Network and LATINDADD determined the emergency currency can help overcome pandemic-related weaknesses in 24 Latin America/Caribbean countries.

To receive a link to ask questions and virtually attend, "Special Drawing Rights and Global Pandemic Recovery," register here. Alternatively, you can join through Facebook Live: https://www.facebook.com/jubileeusa/

Read about Jubilee USA's research on SDRs and pandemic challenges facing Latin and Caribbean countries here.

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