Jubilee USA just published ’’The Responsible Lending and Borrowing Imperative Addressing the Root Causes of Poverty’’. The report analyses the causes of the international debt crises and synthesises concrete proposals for how governments can implement responsible lending and borrowing standards.
“With the international debt crises migrating from the global south to the north – our work to win a real transformative Jubilee and advocating for solutions of the root causes of the debt crises has never been more relevant.” Says Eric LeCompte at Jubilee
For over two decades, the international community has implemented a series of measures to address unsustainable debt burdens in low-income countries (LICs). While milestone achievements in debt relief have been made, the ongoing impact of unsustainable debt burdens on LICs’ development still demands redress.
“As a means of demonstrating the need for more responsible lending and borrowing practices, this study integrates examples from around the world that illustrate the problems of the current system and the manner in which unsustainable debt could have been avoided had such principles been taken into account by creditors before approving or granting loans.” LeCompte continues.
Debt relief and cancellation are necessary but not sufficient.
The lack of transparency, accountability, and respect for democratic processes and information-sharing surrounding loan agreements and international financing has serious implications. The report calls for a reassessment of the holistic explanations for the creation of the debt crisis considering the interplay of political, economic and institutional factors, both domestic and external. A new holistic analysis is needed to develop long-lasting solutions to the root causes of structural and chronic poverty’.
The recommendations in the report reflect Eurodad’s Responsible Finance Charter, a set of recommendations for lenders as well as public and private investors. The global financial crisis will leave lasting scars on the global financial system and will have protracted impacts on poor people across the world. In a context where global finance to developing countries is increasingly volatile, it is ever more important to ensure that inflows will contribute to sustainable and equitable development, benefitting the poor. In the absence of binding responsible lending and investment standards, inflows to developing countries are still offset or outweighed by debt repayments, foreign investment profit repatriation, and illicit financial flows.