Annual Federal Reserve Retreat Focuses on Global Economic Changes

August 25, 2023

In Wyoming, Central Bank Heads and Economists Discuss Inflation and Debt

Wrestling with inflation, country debt levels at historic highs and pandemic related economic shocks, many of the world's central bankers are in Jackson Hole, Wyoming to discuss managing the economies of countries. The annual Federal Reserve 2-day policy symposium, "Structural Shifts in the Global Economy," includes remarks from Fed Chair Jerome Powell, European Central Bank President Christine Lagarde and Ngozi Okonjo-Iweala, World Trade Organization Director General.

"All over the world people can't afford food and poverty is increasing," said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. "Developing countries already pay 7% of their revenue on the interest of their debts. When the Federal Reserve raises interest rates, it means debts increase for countries in crisis."

In April, the IMF forecast the weakest growth in decades. Central banks continue pursuing measures, such as raising interest rates, attempting to fight inflation.

“Central bankers must weigh the reality that more than 165 million people became poor since 2020," noted LeCompte. "If the debts of developing countries continue to go up, countries have less resources to address poverty. When the debts of developing countries increase, food and fuel prices increase across the United States and Europe."

Read the Jackson Hole Economic Policy Symposium agenda here.

Africa Faith Leader Meeting Organized by Jubilee and Partners Mentioned in National Catholic Reporter

August 24, 2023

Jubilee USA Network is mentioned in the National Catholic Reporter regarding the Africa Faith Leader Meeting in Nairobi. Read an excerpt below and click here for the full story.

Catholic bishops, faith leaders appeal for debt relief to help African countries

By Fredrick Nzwili

Ahead of major meetings of world leaders in September, such as the Africa Climate Summit, the G20 New Delhi Summit and the 78th session of the U.N. General Assembly, Catholic bishops and faith leaders in Africa are calling for debt relief for the continent to give Africa a "life line" to escape the multiple crises plaguing its population.

Amid discontent linked to the rising cost of food and living and growing inflation in Africa, economic burdens have been frustrating development, swelling poverty, and triggering conflicts and protests in some of the countries, according to the leaders.

The keyword for them to fix many pressing needs of African people is debt, or rather its reduction.

Africa Interfaith Leaders Call for Debt Relief and Crises Aid

August 08, 2023

Religious Groups Call for Jubilee 2025

African religious leaders called for resolving debt crises to deal with climate, health, food and energy crises facing the continent. The 26 religious leaders from 12 countries represent Catholic, Anglican, Presbyterian and other Christian denominations, the All Africa Council of Churches, Muslim, and indigenous faiths.

Ahead of the upcoming G20 and African Climate summits, the leaders met and issued a joint statement, calling for debt relief and changes to the financial system to address growing crises. Caritas Africa and the Jesuit Justice and Ecology Network Africa hosted the meeting in Nairobi.

African countries owe collectively more than $1.1 trillion in debt and 25 of them face debt crises according to the IMF and World Bank.

“In the late 1990s . . . our faith communities were among those gathered in the Jubilee movement to advocate for breaking the chains of debt in developing countries,” the religious leaders said. “As we approach a new Jubilee year in 2025, that promise remains unfulfilled.”

The 1990s advocacy culminated with the largest debt relief initiatives to date. The Heavily Indebted Poor Countries/ Multilateral Debt Relief Initiatives released $130 billion in exchange for borrowers implementing participatory poverty reduction policies and economic reforms.

“The stakes of this debt crisis are much higher,” the statement reads. “We need large investments to save the planet that sustains life in Africa and elsewhere, during a window that is rapidly closing.”

The leaders stated that the low use of the G20's debt relief initiative, in spite of the high number of countries in crisis is a sign of ineffectiveness. Their document emphasizes the need to address private creditors that hold more than 45% of African debt.

“[M]ajor financial centers that govern their contracts have a special responsibility to pass laws that bind them to share in debt relief,” the interfaith statement adds.

They expressed support for the New York and International Debt Crises Protection Act. The bill, currently pending in the New York State Legislature would ensure that private creditors join debt relief initiatives. The bill is supported by almost a quarter of New York State lawmakers.

The leaders also addressed current needs for more development bank resources.

“African countries will need scaled up access to concessional and low-cost, long-term finance,” they said. “Multilateral development banks are the institutions most capable of deploying such type of funding, but cannot currently keep up with demand.”

In July, G20 finance ministers reviewed a report that makes the case for an additional $500 billion in external public finance to help developing countries meet climate and development goals. Multilateral development banks would have to increase annual grants and loans by $260 billion in order to meet the additional needs.

"Our convergence is... a robust testament to the cohesive strength of interfaith unity, combined wisdom, and a shared commitment to justice," added the leaders.

Read the full Nairobi African religious leaders statement here.

Jubilee USA Comments on the World Bank Group's Evolution Process and Roadmap

July 30, 2023

In response to the World Bank Group's consultation on its Evolution Process and Roadmap, Jubilee USA submitted comments.

Click here to read this submission in pdf format.

Find the official consultation website, Evolution Roadmap and Development Committee paper that served as basis for the consultation here.

Re: Submission to Consultation on World Bank Group’s Evolution Process and Roadmap

Jubilee USA Network is an alliance of more than 75 US organizations and 750 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects and promotes the participation of the most vulnerable.

We appreciate the opportunity to submit these comments on the World Bank Group’s Evolution Process and its Roadmap (“Evolution Process” or “the Roadmap”).

The Evolution Roadmap comes at a moment of growing understanding about the need to make better use of multilateral development banks for financing development and the response to global challenges.

The pandemic shock reversed poverty reduction and human development progress globally. The Russia- Ukraine war, climate change and hunger are among the crises that the world faces and that hit developing countries worst, due to pre-existing vulnerabilities. Developing countries suffer these shocks amidst reduced fiscal space. The slowest 5-year growth in decades, high debts and rising interest rates combine to limit their capacity to respond and, especially, protect their most vulnerable.

Multilateral development banks (MDBs) like the World Bank have extraordinary potential to turn capital contributions from shareholders into development finance interventions several-fold their volume. They have an unparalleled capacity to offer low-cost, long-term funds and play a particularly important role in times of crises, when they provide countercyclical and emergency funding.

In the Roadmap World Bank shareholders endorsed, they signaled their intention to evolve the institution across three dimensions: mission and vision, operations, and financing.

Mission and Vision

The Bank should remain anchored on the twin goals of ending extreme poverty and promoting shared prosperity, which remain pressing priorities and even more so after the reversals the pandemic crisis prompted.

The Roadmap’s proposed work on revised indicators would be a good opportunity to evaluate changes that can better focus the Bank and enable measurement of progress on these goals. For poverty, we suggest the Bank should focus on the elimination of poverty, not just extreme poverty. Given the continuing rise in global inequality, and its inextricable relationship to poverty reduction, reexamining indicators on shared prosperity is also in order. The Palma ratio, as well as other alternative yardsticks, are practicable and more suitable to track progress in reducing inequality of wealth and income between the top and the bottom quintiles.

Building an economy that serves, protects, and promotes the participation of the most vulnerable

It is natural and desirable that the Bank’s mission and vision adapt as our awareness of global challenges that threaten poverty and shared prosperity in each country change. At the same time, there is a risk that without sufficiently large expansion of finance – including concessional finance – addressing such interlinked challenges may come at the expense of equally or more critical country-level priorities to address poverty and inequality.

Therefore, the considerations on mission and vision can only receive a conclusive response in light of the financing envelope the Bank will ultimately achieve as the financing pillar of the Roadmap shapes up. In that regard, mission/vision and financing are highly interdependent and deserve to be considered as a whole.

Operations

We support the World Bank maintaining the country-based model as its core delivery model. New and evolved lending instruments should advance – or at least maintain – existing country-level, bottom-up processes for citizen participation and accountability.

The Roadmap suggest two cross-cutting priorities to enhancing the operational model: private capital facilitation and domestic resource mobilization.

We support the focus on domestic resource mobilization. Strengthening domestic revenue bases in countries is an essential pillar of sustained and resilient financing for development, and should include more support to clients for the identification, monitoring and combat of illicit financial flows.

On private capital facilitation, we have a more nuanced view. We agree that the immense financing needs of developing countries cannot be met by public finance alone, and the need to align private sector flows with sustainable development and climate goals. The World Bank can play a positive role in signaling and incentivizing such alignment and setting high social, environmental and governance standards in private sector operations.

There should be strong scrutiny and a presumption against any World Bank interventions that de-risk private finance so they do not lead to a socialization of risks and privatization of benefits or encourage private rent-seeking behaviors. In the Bank’s partnership with the private sector, and that by clients, the guiding notion should not be de-risking, but risk-sharing. The private sector can be an agent of finance, innovation and entrepreneurship in delivering sustainable development outcomes, but these virtues are due precisely to its inherent capacity to take risks in a well-regulated environment.

World Bank Group support for the private sector, when not given in commercial terms, is a subsidy. As such, any decision to extend it should adhere to clearly established guidelines, consider unintended impacts on the market and alternative ways the resources for such subsidy could have been used. The intended development impacts of granting such subsidy should be clear from the outset and transparent to all stakeholders, and the Bank should set up mechanisms for monitoring and evaluation of their achievements and holding private actors accountable when they fail to deliver.

Financing

Given their efficient model to intermediate and leverage shareholder finance, the MDBs, and the World Bank in particular, represent the best hope of achieving the scale of hundreds of billions in annual and additional sustainable development support the world needs.

In that regard, we welcome the initial steps towards expanding World Bank financing and the further consideration of proposals that the G20-commissioned Independent Review of MDBs’ Capital Adequacy Frameworks submitted last year.

In order to reach the desired volume, however, measures to better use existing capital will need the complement of shareholders’ injections of capital.

With many borrower countries past their capacity to take on new lending, debt sustainability considerations should guide the Bank’s deployment of financing modalities. To that purpose, we recommend:

-Expand concessional finance: A significant part of the expansion should be in the form of additional concessional finance. The Bank should review criteria to determine access to concessional finance, to ensure it addresses vulnerability and need in a more comprehensive way that the reductionist income- based approach that excludes many middle-income countries today. At the same time, expansions of access should not come at the expense of the resources available for countries currently eligible for concessional finance.

-Risk-sharing modalities in lending: We appreciate the recent announcement that the Bank plans to implement climate resilient debt clauses in its loans and encourage further consideration of countries, cases, and relief through state-contingent debt instruments. At the same time, the Bank can play an important role in fostering use of risk-sharing modalities through its own sourcing. The scale, know-how, technical skills and access to data place the institution in a unique position to issue state-contingent debt instruments where individual clients cannot, and to pass their benefits to clients. The Bank would be playing an important role in market-making.

-Strengthen debt sustainability and accountability safeguards: The Bank should spearhead adoption of responsible lending and borrowing principles, and provide support and incentives for use of disclosure and authorization frameworks for debt contracts.

-Expanded use of guarantees: Under certain conditions, guarantees could enable projects to move forward while limiting the debt in recipient countries’ balance sheets. However, the Bank will need to advance solutions to demand- and supply-side constraints that currently limit their wider use.

G20 Finance Ministers Focus on Debt, Development and Dismal Economic Outlook in Gandhinagar

July 14, 2023

IMF Forecasts “Bleakest” Economy in Decades

On Monday, G20 Finance Ministers hold their third meeting hosted in Gandhinagar by the Indian government. The gathering comes as IMF global economic growth forecasts remain the lowest in decades.

“Global economic challenges are pushing countries deeper into debt,” said Eric LeCompte, Executive Director of Jubilee USA Network, who has followed IMF and G20 policies for more than a decade. “The pandemic, the Russia-Ukraine war and high interest rates are raising debt in developing countries and these countries don't have the resources to respond to their food and climate crises.”

In June, after more than two years, governments holding Zambia debt announced agreement to reduce collection by the equivalent of 40%. However, payments will increase if Zambia’s economy does better, and will not decrease if it does worse than expected. Zambia still has to negotiate a restructuring of near $7 billion in debt owed to private creditors.

“More than 60% of Zambia's people live in poverty,” noted LeCompte. "Not enough debt was cut to address the suffering of Zambia's people."

The debt renegotiation took place under a process set by the G20 in late 2020 to cut developing country debts, the Common Framework for Debt Treatments. Zambia and Chad are the only countries to receive some relief so far.

Finance Ministers will review a report on additional needs for multilateral development bank lending. Former US Secretary of Treasury Larry Summers and former chairperson of the Fifteenth Finance Commission of India Nand Kishore Singh chair the group issuing the report.

“Development banks need more money and need to implement reforms to effectively distribute additional resources to respond to regional crises,” stated LeCompte.

G20 commitment to transfer $100 billion in emergency pandemic aid – Special Drawing Rights (SDRs) – from wealthy to poor country economies will also be on the agenda. More than $400 billion, out of $650 billion the IMF created in 2021, went to wealthy economies which committed to redirect $100 billion of their share to developing countries.

Axios Quotes Eric LeCompte on the New York Taxpayer and International Debt Crises Protection Act

June 12, 2023

Axios quotes Eric LeCompte on the New York Taxpayer and International Debt Crises Protection Act (S4747, A2970). Read an excerpt below and click here for the full article.

Ambitious N.Y. bill takes aim at global debt woes

By Kate Marino

A bill quietly making its way through the New York state legislature could upend the world of sovereign debt investing.

Why it matters: There’s a debt crisis brewing among lower-income nations, and creditor gridlock is prolonging the pain for countries like Zambia and Sri Lanka that need to restructure their unsustainable debt loads.

Enter New York: About half of sovereign bonds are governed by New York law — so Albany (the capital of New York state) wields outsize influence on the global lending landscape.

A group of state legislators has proposed a short bill with tall ambitions — but critics charge there’s a host of unintended consequences that'll make things worse for those the bill is meant to help.

Read here for more.

New York Lost, Won, Champions Vow to Win

June 11, 2023

Friend,

We cannot thank you enough for your tireless efforts over the last year as you moved forward the New York Taxpayer and International Debt Crises Protection Act. The reality is that because of your non-stop efforts since February we turned an issue that no legislator knew about, to an issue where we won a commitment from leadership to move something in support of our efforts over the next year.

The New York State Senate and Assembly closed their legislative session on Saturday without voting on the New York Taxpayer and International Debt Crises Protection Act (A2970/S4747). The bill cleared Assembly Judiciary Committee, with bipartisan support, and was the first global debt relief legislation to move through the New York legislature in nearly 20 years. The legislation was designed to stop predatory "vulture fund" behavior, alleviate poverty in developing countries, address high food prices and protect pensions and US taxpayers. It was supported by unions, major religious institutions, development groups, notable economists, finance ministers, powerful environmental organizations, our global partners and high-level United Nations officials.

Senator Sponsor Brad Hoylman-Sigal is committed to start hearings and Assemblymember Sponsor Patricia Fahy is working to pass the legislation, as you see from their statements below. Predatory "vulture" hedge funds are on notice and it's doubtful they will buy more distressed debt in the next year as our legislation is still pending for a vote. Generally private and commercial firms will try to prove that they are participating in debt relief negotiations with a new fervor as the majority of the world's countries face crises.

At the same time, we are aware that people will die in developing countries because this legislation did not pass, long food lines will continue at our pantries, US taxpayers will bail out private firms and that the aid for climate mitigation and adaptation will not reach developing countries in dire need.

Multiple legislators (as you see in their statements below) noted that this is the most vibrant campaign ever seen in Albany and that we have more unique memos of support than any other legislation. We have 49 cosponsors in the Assembly and Senate. This is almost a quarter of the members in both bodies - and we know many, many more committed to vote yes. You and more than 60 partner organizations generated tens of thousands of phone calls and e-mails to Governor Kathy Hochul and Senators and Assemblymembers.

Our legislation is still alive for another year and a half and we will win, we must win as too many lives hang in the balance.

New York lawmakers, unions and religious groups vow to continue their efforts until the New York Taxpayer and International Debt Crises Protection Act becomes law:

Assemblymember Patricia Fahy and A2970 sponsor:

"I remain fully committed to passing the New York Taxpayer and International Debt Crises Protection Act along with Senator Brad Hoylman, legislative cosponsors, Jubilee USA, and coalition partners at the earliest possible opportunity next session. This is a wake-up call, and I’m pleased that private creditors, vulture funds, and Wall Street are taking serious note of this legislation. Developing nations, New York taxpayers, and global markets are depending on us to get this done, which is why I look forward to aggressively pursuing this issue along with my colleagues in the months to come.”

Senator Brad Hoylman-Sigal and S4747 sponsor:

“I’m grateful to the Jubilee USA Network for their work this legislative session in advancing international debt relief and New York State’s crucial role in helping reform the laws in this area to assist developing nations. I look forward to continuing to work with my Senate colleagues, including Senator Rivera and Senator Krueger, and pursuing a public hearing on this issue of international importance.”

Senator Leroy Comrie:

“This bill's reforms are necessary to protect taxpayers, workers, retirees and consumers and we will work to get them done by 2024.”

Senator John Liu:

“We will not stop our efforts until the New York Taxpayer and International Debt Crises Protection Act becomes law.”

Senator Luis Sepulveda:

"The Hoylman/Fahy bill is crucial to promote effective and orderly sovereign debt restructuring, achieve equitable burden-sharing, and prevent financial system disruption. This bill safeguards the interests of New Yorkers and supports international stability. Together, we can ensure sustainable outcomes and mitigate the impact of crises on our economy."

Assemblymember Brian Cunningham:

"We are committed to passing this law to protect New Yorkers and our brothers and sisters in the Caribbean, Africa, Asia and Latin America.”

Assemblymember Edward Gibbs:

"One of the most important reasons for us to pass this bill is because it will protect New York taxpayers. When vulture funds refuse to offer relief - they get bailed out by our tax dollars."

Assemblymember Alicia Hyndman:

"We've seen an extremely vibrant campaign working to pass this law. I join the unions, religious groups, major economists and development organizations who won't stop until we have a new debt relief law.”

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

"Because the New York Taxpayer and International Debt Crises Protection Act provides debt relief for our world in crises en masse, it protects Puerto Rico taxpayers, addresses inflation and economic shocks and helps address Puerto Rico's rising food prices."

Ruth Messinger, Former Member of New York City Council and Mayoral candidate, Global Ambassador and Former President and CEO, American Jewish World Service:

“It appears to be easy, sitting in Albany, to delay, to listen too carefully to those who will profit from the legislation not passing and to not hear the voices, and often the cries, of millions of children, women and men in the Global South who are losing education and health care resources, whose lives are in the balance. This is precisely the kind of issue that demands rapid action, yet our legislators have walked away from that reality.”

Brian McDonnell, Political and Legislative Director, AFSCME New York:

“AFSCME represents more than 400,000 public service workers in New York State. Our union maintains that private creditors should play by the same rules as government creditors. Although we fell short this session, we will continue to fight the vulture funds that hold countries hostage to squeeze out profit at the expense of their citizens and the essential public services that they rely on. Our union is a proud partner of Jubilee USA.”

Rev. Peter Cook, Executive Director, NYS Council of Churches, and Rashida Tyler, Deputy Executive Director, NYS Council of Churches:

"We are immensely disappointed that the New York Taxpayer and International Debt Crises Protection Act has not come to the floor for a vote this session. The legislation could have immediately assisted developing nations at risk of default. We are seeing the direct results of the global debt crisis here in New York State, as thousands of asylum seekers have come to the state in recent months. Many are from countries that are carrying unsustainable debt, which prevents them from being able to provide for basic human needs. We believe in this legislation, and thank the many supporters in the legislature for their courage to sponsor and co-sponsor this historic bill. We stand with the many congregations, faith leaders, NGOs, and international humanitarian organizations and will continue to fight to get this bill passed."

Rev. Nicolle D. Jean Simon, NAACP President of Schenectady Branch, Pastor of Duryee Memorial A.M.E Zion Church:

“I, like many other New Yorkers, have relatives in a developing country that is greatly distressed by the global debt crisis. Our state government can step in to help our families by passing the New York Taxpayer and International Debt Crises Protection Act. This groundbreaking bill allows New Yorkers to lend a helping hand to some of the world’s most marginalized. This bill will also result in lower food prices and gas costs. Not only is passing this bill the right thing to do, but it’s also a win-win situation for all. The passing of this legislation is critical. Let’s get it done by 2024!”

Ben Grossman-Cohen, Director of Campaigns at Oxfam America:

"New York legislators may have gone home, but the vulture funds who profit off the global debt crisis are still hard at work. The result of this inaction is that countries will continue to face default and the world’s poorest people will lose out on medical care, education, food and other essential services. But this fight is not over. We look forward to ensuring this bill gets the consideration it deserves when session resumes.”

Eric LeCompte, Executive Director of Jubilee USA Network:

“This legislation has support in every corner of the world. We got this far because of the amazing lawmakers who were our champions. Our labor, religious, development, environment and diaspora organizations are committed to push this legislation until it passes. This bill helps all of us."

Read and review information, videos, actions, supporter memos and much more on the New York Taxpayer and International debt Crises Protection Act here.

Read just some of the amazing press coverage on our efforts here.

As we continue to push for a vote on our active legislation, the G7, G20, US government and IMF are actively discussing the solution our bill wins. New York and other financial debt-governing jurisdictions need to pass legislation to bring private creditors into debt relief. Your work made this more than an option on the table to something that world leaders must take action on.

Gratefully,

Eric LeCompte
Executive Director

Twitter: @Eric_LeCompte
www.jubileeusa.org/support-us

Ps. Please make a gift to support Jubilee USA's mission and our educational and outreach efforts. Gifts are matched.

Jubilee USA Network
110 Maryland Ave. NE, Ste. 210 - Washington, DC 20002
(202)783-3566 - [email protected]

New York State Senate, Assembly Fail to Pass Taxpayer and Debt Crises Protection Legislation

June 10, 2023

S4747/A2970 Bill Champions Vow to Pass Debt Relief Legislation Within Next Year

The New York State Senate and Assembly will likely close their legislative session by Monday without voting on the New York Taxpayer and International Debt Crises Protection Act (S4747/A2970). The bill cleared Judiciary Committee in the Assembly and was the first global debt relief legislation to move through the New York legislature in nearly 20 years. The legislation was designed to stop predatory "vulture fund" behavior, alleviate poverty in developing countries, address high food prices and protect pensions and US taxpayers. The bill is supported by unions, major religious institutions, development groups, notable economists, finance ministers and high-level United Nations officials.

New York lawmakers, unions and religious groups vowed to continue their efforts until the New York Taxpayer and International Debt Crises Protection Act becomes law: