New York Legislation Resolves Developing Country Debt Crises and Protects US Taxpayers

Bill Can Ease Global Supply Shocks and Help Vulnerable People Weather Pandemic and Ukraine Economic Shocks

A New York State Assembly bill requires private creditors to join debt relief initiatives for developing nations struggling with debt crises, the pandemic and Ukraine war-related economic shocks. The New York Taxpayer and International Debt Crises Protection Act, was introduced in May by Assemblymember Patricia Fahy, Chair of the Banks Committee. 

“This legislation will help resolve debt in developing countries more easily, many of whom are reeling from the effects of the COVID-19 pandemic and Ukraine invasion,” said Fahy. “I’m proud to introduce this legislation and require that private creditors join in debt relief funding deals for developing countries to resolve financial and debt crises. While you might not know it, most of the world’s private debt is arbitrated here in New York, and this legislation will provide much needed debt relief across the board.”

Over 50% of the world's debt held by private creditors is contracted under New York State law. Fahy's bill ensures private creditors participate in debt relief initiatives at the same level as the US government, other governments and other creditors.

In the first year of the pandemic, developing country debt rose by five times the average increase of previous years. Under the leadership of the Trump and Biden Administrations, G20 countries established a process that allows up to 73 of the world’s poorest countries to obtain debt relief from all creditors. Although the G20 and US government were clear that private creditors should provide debt relief, private creditors have not announced any debt relief agreements to date.

Treasury Secretary Janet Yellen and the IMF consider pandemic-related economic disruptions are partly responsible for record-high inflation in the US. Supporters of the legislation assert that US and New York residents benefit from the bill.

“People living in New York and across the United States face supply shocks and health risks because of crises in developing countries,” said Eric LeCompte, Executive Director of the religious development coalition Jubilee USA Network. LeCompte's bipartisan organization won numerous global debt relief agreements over the group's 25 year history. “Other countries whose courts settle debt disputes should follow Assemblymember Fahy’s leadership and implement similar critical initiatives.”

While the majority of the world's private sector and bank debt is contracted under New York law, more than 40% is contracted under United Kingdom laws. The remaining portion is mostly held by Germany, France, Japan, Singapore, Belgium and Australia.

"This New York State bill is modeled after highly successful legislation in the UK, to ensure that taxpayer money sent to feed the hungry is not diverted to pay creditors," said Georgetown Law professor Anna Gelpern, who participated in discussions on this legislation. "The new law would be an important addition to the crisis management toolkit at a time when debts in countries are at critical levels, and governments are struggling to meet their citizens' basic human needs. A transparent, coordinated, equitable debt resolution process is essential to get us through this period." 

View the NY Taxpayer and International Debt Crisis Protection Act and bill memo here.

Read Jubilee USA's press release on the introduction of the bill here

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G7 Presses China and Private Creditors on Debt Relief

Ukraine War, Debt and Inflation were Focuses of the G7 Meeting

G7 finance ministers issued their strongest statement to date pressing China and the private sector to engage in debt relief efforts for developing countries. Germany, holding the G7 presidency this year, hosted the meetings in Bonn and Königswinter.

“The G7 put the spotlight on the need for China and the private sector to participate in debt relief initiatives,” noted Eric LeCompte, Executive Director of Jubilee USA Network. LeCompte has monitored the G7 meetings for more than a decade.

G7 countries stressed the need for private creditors to participate in debt relief. On Thursday, New York State Assemblymember Patricia Fahy introduced the New York Taxpayer and International Debt Crises Protection Act. The bill compels private creditors operating under New York State law to participate in debt relief initiatives at the same level as the US government, other governments and other creditors.

“New York legislative action ensures private creditors will participate in the debt relief that the G7 is calling for,” added LeCompte.

The G7 pledged to support Sri Lanka debt restructuring efforts as the developing country became the latest one to default.

“The fact that Sri Lanka is not covered by current debt relief agreements shows the urgency of expanding relief initiatives to more countries facing crises,” stated LeCompte.

The Ukraine war, inflation, food and climate action were key aspects of the three-day meetings. G7 presidents and heads of state meet in Schloss Elmau, Germany in June.

Read our press release on the newly-introduced New York Private creditor bill here.

Read the full G7 Finance Ministers Communiqué here.

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New York Legislation Focuses on Pandemic Aid for Developing Countries and Requires Private Creditors Join in Debt Relief Deals for Poor Nations

US Taxpayers, Consumers and Economy Poised to Benefit from Action

A newly introduced bill in New York State aims to help resolve debt and economic crises that developing countries face in the wake of the pandemic.

"Most of the world's private debt is contracted and arbitrated under New York State law," noted Eric LeCompte, the Executive Director of the religious development coalition, Jubilee USA Network. LeCompte serves on United Nations debt working groups. "As most countries face terrible economic and debt crises due to the pandemic and the Ukraine war, decisions made in New York will impact how developing countries can resolve their debt crises."

Under the New York Taxpayer and International Debt Crises Protection Act, private creditors would participate in debt relief initiatives at the same level as the US government, other governments and other creditors. State Assemblymember Patricia Fahy sponsors the legislation introduced on Thursday.

The supporters of the legislation point out that the bill will benefit New York residents too.

“The bill addresses debt crises in developing countries, protects US taxpayers and helps limit economic and supply shocks,” said LeCompte whose organization has won more than $130 billion in debt relief initiatives for poor countries.

The pandemic accelerated economic crises in developing countries, which saw debt rise in 2020 by five times the average increase of previous years. The US led the G20 to create a process that allows up to 73 of the world’s poorest countries to obtain debt relief from all creditors. Currently, Chad, Ethiopia and Zambia have requested relief from the G20 Common framework process. The newly-introduced bill requires that all private creditors who fall under New York State law participate in the G20 and other international relief processes.

“Debt relief is longstanding US policy with bipartisan support,” added LeCompte. “Facing the pandemic in developing countries and ensuring long-term financial stability requires that all creditors support debt relief."

Private creditors hold more than 60% of debt of developing countries. Research shows that when debt restructurings take place, private creditors receive on average 20% more than their public taxpayer-funded peers.

“Resolving debt crises is about protecting people in developing countries and protecting against inflation and the other impacts these crises have on our own economy,” shared LeCompte.

Treasury Secretary Janet Yellen and the IMF consider pandemic-related economic disruptions, later worsened with the Ukraine war, are behind rapid price rises hitting consumers in the US and other wealthy economies. US inflation reached a four-decade high in March. 

View the NY Taxpayer and International Debt Crisis Protection Act and Bill Memo here.
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Biden, G7, G20 Host Second COVID Summit

Leaders Pledge Vaccines, Treatments and Health Investment

President Biden hosted heads of state and philanthropy and private sector leaders for a second summit on COVID-19 response. At the virtual gathering, leaders of over 35 countries pledged actions to vaccinate 70% of the world population, expand access to tests and treatments and invest in global health security.

“Too many developing countries lack access to vaccines, treatments and medical equipment to fight the coronavirus,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. “The White House is playing a vital coordinating role for a global response to the health crises spurred by the pandemic.”

President Biden co-hosted the summit with chairs of the G7, G20, the African Union and CARICOM. In September, the Biden Administration organized the first COVID summit, on the sidelines of the United Nations General Assembly.

The World Health Organization estimates 15 million people have died due to the coronavirus. In Africa, only 12% of the population is fully vaccinated. 

“Continued spread of the virus keeps alive the threat of new mutations that could be more lethal or elude vaccines," added LeCompte. "Now developing countries are also dealing with food and fuel challenges because of the war in Ukraine. Without more aid and debt relief, many countries won't have the resources to confront the pandemic or prepare for future health threats."

The US pledged additional funds for a proposed global pandemic fund at the World Bank that the G20 supports, bringing the US total pledges to $450 million. At the meeting World Bank chief David Malpass announced he expects to launch the fund, which collected almost $1 billion in commitments, in June.

Biden reaffirmed the US commitment to deliver one billion vaccines to developing countries, half of which the US already sent.

“While vaccine distribution played into the conference, much of the focus was on preparing for future health crises,” stated LeCompte.

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AFL-CIO/Jubilee Ukraine Pandemic Barron's Commentary

Eric LeCompte and Cathy Feingold, the Deputy President of the ITUC and International Director of the AFL-CIO, writing for Barron's call for global economic policies in response to the Ukraine war and the health and economic crises severely impacting most of the world due to the pandemic. . Read the full article here.

A Resilient Global Economy Is Within Reach

By Eric LeCompte and Cathy Feingold

War rages in Ukraine and a global crisis looms. Gas prices rise and around the world, wheat, corn and fertilizer prices skyrocket. The International Monetary Fund says the global economy will slow, contributing to food shortages in developing countries. Russia’s war on Ukraine combined with Covid-19 made a terrible global situation worse. There are economic policies that Republican and Democratic leaders can find common ground with the Biden administration to make the U.S. and global economy more resilient in the face of these threats.

Before the war, the pandemic revealed the catastrophic consequences of persistent global poverty and inequality for everyone—not just the poor. In response, U.S. economic strategy must focus on transparency, democracy, and what Pope Francis calls “a preferential option for the poor.”

The Ukraine crisis shows what a difference U.S. leadership makes. As the world suffers impacts from the war and pandemic, our country can and must be the respected neighbor whom others look to in a crisis. We can bring other countries together to help ensure our global future is peaceful, prosperous and democratic. Covid shows that public health is global—when some of us are vulnerable to the disease, we all are. The same is true of economic prosperity. With supply and economic shocks, U.S. prosperity depends on global prosperity.


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Indebted to faith: How the Jubilee campaign aims to end global poverty

By Shabtai Gold

A few days have passed since the gloomy Spring Meetings of the World Bank and International Monetary Fund, rife with warnings about the war in Ukraine and looming food riots, so Eric LeCompte is a welcome breath of fresh air. The leader of the Jubilee USA Network has an understated positive vibe that is quietly infectious and not exactly discernable at first.

His career began in the mid-1990s in New York’s Catholic homeless shelters and soup kitchens, and it later took him to advocate against torture in Latin America through work at School of the Americas Watch. Now with Jubilee in Washington, he’s focused on reworking a global financial system he says is based on outdated architecture that perpetuates inequality.

There are “a few countries at the top who call the shots for the whole world,” he says, leading to his sharp focus on lower-income countries’ debt burdens.

LeCompte is deeply enmeshed in the details of global finance, not just abstractions. He is intimately familiar with the fine print of challenges facing debtor nations, from excessive loan burdens and interest rates to corruption and trade.

He says both low- and high-income countries must improve their performances to end the cycle of indebtedness and poverty.

“The reality is, countries go into debt because they are not capturing revenue at home,” he says, noting that tackling illicit financial flows and corruption often involves leadership at both ends of the wealth spectrum. His rhetoric focuses less on blame and more on action.

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Rising Interest Rates in US Will Hinder Foreign Economies

By Paul Wiseman 

WASHINGTON (AP) — When the Federal Reserve raises interest rates — as it did Wednesday — the impact doesn’t stop with U.S. homebuyers paying more for mortgages or Main Street business owners facing costlier bank loans.

The fallout can be felt beyond America’s borders, hitting shopkeepers in Sri Lanka, farmers in Mozambique and families in poorer countries around the world. The impacts abroad range from higher borrowing costs to depreciating currencies.

“It will put pressure on all types of developing countries,” said Eric LeCompte, executive director of the Jubilee USA Network, a coalition of groups seeking to reduce global poverty.

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African Bishops Urge Global Finance Leaders to End Isolation of Poor

By Ndubuisi Francis

African bishops under the aegis of Symposium of Episcopal Conferences of Africa and Madagascar (SECAM) have called on global financial institutions meeting in Washington DC, United States of America to, “help shape an economy that better protects the dignity and basic human rights of our sisters and brothers all around the world.”

The bishops also called on the finance ministers and other leaders to implement viable wide-ranging plans to help Africa emerge from its economic crisis as well as to resume progress toward meeting the current list of the United Nation’s Sustainable Development Goals (SDGs), the Paris climate agreement, and the African Agenda 2063 plan for economic and human development.

The executive director of Jubilee USA, an alliance of faith-based development and debt relief advocacy organisations working with SECAM, Eric LeCompte said the bishops felt it was time for the large global financial system to address the needs of Africa more fully.

“It became clear during the pandemic that Africa would see some of the most severe job losses and the most significant increases in extreme poverty and yet be left out of a lot of the response.

“This was a significant concern of the bishops in Africa,”LeCompte told Catholic News Service.

He added; “We wanted to work together more closely in global advocacy that looked at all the changes that are needed and all of the solutions that are needed to address this kind of problem. And also really lift the voice of those affected in Africa.”

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African bishops want more international support for the poor

KN Editorial

African bishops want finance ministers worldwide to take measures to end the isolation of poor and vulnerable people. They issued an appeal this week in the run-up to the meetings of the International Monetary Fund (IMF) and the World Bank.

During the meetings to be held on April 22 and 23, the IMF and the World Bank will discuss the issues after the global corona pandemic. Many countries are experiencing high inflation as a result of the pandemic. They also have to deal with the consequences of the extensive economic sanctions against Russia in response to the war in Ukraine.

Eric LeCompte, director of a US alliance of religious NGOs working with SECAM, said the bishops believe it is time to better serve Africa's needs.

During the pandemic, Africa faced severe job losses and it became clear that extreme poverty would increase significantly, he said. But nothing happened.

"This is a major concern of bishops in Africa," he added in an interview with CNS news agency. “We want to work more closely together in global advocacy, looking at all the changes and all the solutions needed to tackle these kinds of issues.” They also want to give those affected in Africa a voice.

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African bishops call for world leaders to reject ‘unequal and unsustainable’ economic model

By John Lavenburg

NEW YORK – As world finance leaders meet this week in Washington, D.C., African bishops are calling for a “viable” plan for the continent to emerge from the current economic and health crisis with “resilience,” and for decisions that promote an economically just society.

“As we work for recovery, we are not doing so in order to return to an unequal and unsustainable model of economic and social life, where a tiny minority of the world’s population owns half of its wealth as millions live below the poverty line,” said an April 20 statement from the Justice, Peace and Development Commission of the Symposium of Episcopal Conferences of Africa and Madagascar (SECAM).

Emerging markets and developing economies will bear the brunt of the forecasted challenges. However, Eric LeCompte, executive director for Jubilee USA Network, told Crux that the reports are actually “really bad news for all of the countries of the world.”

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