Australian Government urged to call on IMF and G20 to cancel foreign debt in 2020

New research outlines urgent measures to secure $1 trillion for COVID-19 crisis

15.04.20

ActionAid Australia is calling on the Australian Government to push for the cancellation of all external debt repayments due in 2020 for low-income countries, as G20 Finance Ministers grapple with the biggest economic crisis in generations ahead of the International Monetary Fund (IMF) and World Bank virtual Spring meetings starting tonight.

New research by the global women’s rights organisation reveals how a debt crisis has left health systems in the Global South vastly underfunded and ill-prepared for the COVID-19 pandemic, with debt servicing far outstripping spending on health. ActionAid recommends a series of costed measures which could secure a cash injection of almost $1 trillion to tackle the immediate needs of the COVID-19 crisis and help save lives.

Despite the recent arrival of the coronavirus in Africa, the continent’s average ratio of deaths to cases is already higher than Italy, Spain and the US. Foreign debt repayments have crippled public services across the African continent.

Kenya, which spent 36% of GDP on debt servicing in 2019, would have an additional $4bn to spend on public services if its external debt payments were suspended. Congo-Brazzaville is spending five times as much (1.4bn USD) on foreign debt repayments as on health (259m USD).

Michelle Higelin, Executive Director of ActionAid Australia said: “The triple threat of the coronavirus pandemic, economic recession and the climate crisis have revealed a deeply flawed global economic model that puts profits before people and the planet. COVID-19 threatens to overwhelm already weak health systems and developing countries need immediate debt relief to free up resources to tackle this health emergency.

“ActionAid Australia welcomes the Australian Government’s initial assistance to our Pacific neighbours to stem the spread of COVID-19 and its willingness to provide flexibility within the aid program. However, the reallocation of existing aid is not sufficient. We can and must do more to support low-income countries globally to mitigate the economic fallout.

“Debt relief is critical with eight countries in the Pacific region facing severe to moderate debt distress. Tropical Cyclone Harold that made landfall last week in the region causing widespread destruction in countries like Vanuatu has only made the situation more dire.”

Data from ActionAid’s new global report, Who Cares for the Future: Finance gender responsive public services!exposes how several countries are spending more than three times as much on external debt repayments than on health. If foreign debt repayments are suspended countries would gain access to money already in their treasuries to respond to COVID-19.

Ghana has one of the highest debt servicing costs in the world, at 59% of GDP, spending $4.1 billion on foreign debt payments compared to $1.3 billion on health. An emergency external debt suspension would enable Ghana to double its 115,650 health-workers and still have $1 billion left over.

ActionAid’s research shows how quality public services could reduce the burden of women’s unpaid care work and provides costed examples of how developing countries can afford to rebuild health, education and social protection systems that liberate women from the burden of unpaid care work.

Ms Higelin said: “Women are on the frontlines of the COVID-19 crisis, as health workers, carers, and informal workers. Without a public safety net, women will continue to bear the brunt of this and future crises. We need to build societies and economies that care for both people and the planet.”

On average, women spend four hours and 25 minutes daily doing unpaid care and domestic work, in comparison to men’s average of just one hour and 23 minutes. This is changing by less than a minute per year. If properly valued this work would constitute at least 9% of global GDP or US$11 trillion.

ActionAid estimates that if the report’s recommendations were implemented, it would reduce the amount of time that women spend on unpaid care and domestic work globally by nine billion hours every single day by 2030.

For more information and interviews contact Liz Pick, ActionAid Australia’s media manager on +61(0)422105840 or email [email protected].