Private creditors would join debt relief processes supported by Republican and Democratic White Houses for the last 25 years, with new bills introduced in the New York Senate and Assembly.
Countries coping with the pandemic, war and multiple crises can seek debt relief under a new law just introduced by Senator Brad Hoylman-Sigal, Judiciary Committee Chair. Hoylman-Sigal's legislation, The New York Taxpayer and International Debt Crises Protection Act, S.4747, a companion bill to A.2970 that Assemblymember Patricia Fahy champions in the New York Assembly. Proponents assert that the bill will help address inflation and supply shocks hurting New Yorkers.
"As the financial capital of the world, New York has a critical role to play in addressing the crippling debt of other nations," said Hoylman-Sigal. "Our “New York Taxpayer and International Debt Crises Protection Act” (S4747) with Assemblymember Fahy will help countries struggling to recover from challenges like climate change and COVID and better take care of their constituents. At the same time, the bill will protect New York taxpayers and reduce the harmful impact of inflation. I look forward to passing it in this legislative session."
Over the last two years, the heads of the International Monetary Fund and the World Bank argued that financial jurisdictions, like New York State, should have plans for debt relief since private debt is governed by contracts in these financial jurisdictions. More than half of the world's private debt contracts are subject to New York State law.
“The global COVID-19 pandemic, war in Europe, and ongoing climate crisis have all laid bare just how interconnected the global economy has become today,” said Fahy. “New York State is the world’s financial hub — positioning us well to enact basic changes that will ensure debt relief for developing nations through investments in sustainable growth, infrastructure, and more.”
The participation of private creditors in debt relief initiatives at the same level as the US government, other governments and other creditors, will also protect US taxpayer-funded debt relief commitments. Privately-held debt represents more than 60% of debt in developing countries.
“The bill is critical for many countries struggling with soaring poverty rates and debt crises that became worse during the pandemic,” stated Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. The bipartisan group is focused on debt policies because they argue it impacts poverty and inequality in the US and abroad. “Because New York and the United States are relying on these countries for trade, their debt crises affect what we pay for eggs, flour and coffee," continued LeCompte.
Since the legislation promises such benefits to US taxpayers and consumers, the legislation is gaining traction with unions and New York major religious leaders.
“Not only will this legislation protect American taxpayers, it will spur new development and growth within the global economy, reduce stress on international supply chains, and establish clear strategies for growth in nations burdened by massive amounts of debt,” stated Fahy. “I’m proud to introduce the New York Taxpayer and International Debt Crises Protection Act with Senator Hoylman-Sigal and look forward to working on this issue with my colleagues in the state legislature to deliver economic justice for nations and peoples across the globe.”