In their statement, Caritas Africa officials appeal to the G7 to grant borrowers “a suspension of debt payments” while they reach an agreement with all creditors.
Furthermore, debt relief assessments must be reformed to enshrine the principle that human development and climate investments come before debt payments, they say.
“The G7 countries, as key debt-governing jurisdictions, must pass national legislation that prevents private creditor litigation from undermining international debt relief efforts,” Caritas Africa officials say.
They call on world financial leaders to support African countries experiencing an economic crisis due to the COVID-19 pandemic, which they say has reversed gains made in fighting poverty on the continent.
“We, religious leaders of Africa, write to the Group of 7 and African financial leaders as our continent grapples with an unprecedented confluence of crises,” Caritas Africa officials say, adding: “The consequences of The pandemic caused economic problems. contraction of more than 3 percent and reversed years of development progress.”
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After two decades of poverty reduction, more than 40 million Africans have fallen into extreme poverty since 2020.
According to officials of the entity, which is one of the seven regions of Caritas International, global economic trends promise further turmoil. Caritas Africa officials say: “Less than three years after the biggest global recession in a century, the threat of recession looms again.”
They point out that the impact of the war between Russia and Ukraine, the worsening of the drought in the Horn of Africa and the concerted rises in interest rates in the main economies threaten to derail the “fragile” recovery of the African continent.
“Budget deficits and unpayable debts have reduced the space that our countries have to take the necessary measures to protect the most vulnerable and restore prosperity,” Caritas Africa officials lament.
In addition to their call for world economic leaders to address debt crises, Caritas Africa officials are proposing the extension of special drawing rights (DEG) to cover other areas of difficulty, including the fight against the hunger crisis in various parts of Africa.
“The creation of $650 billion in SDRs for coronavirus response and recovery has improved stability and supported financing for vaccines, health and social protection, and economic stimulus programs in many African countries,” they say, adding : “We believe that SDRs have a much more important role to play in supporting health, education, food and social investments, climate adaptation and the achievement of the Sustainable Development Goals.”
“We note with regret that despite promises by rich countries to rechannel $100 billion of their SDRs, this promise remains unfulfilled to date,” Caritas Africa officials say.
They add: “We join other voices in calling on rich countries to redirect a significant portion of their holdings of more than $400 billion in special drawing rights back to African countries.”
They also stress the need to prevent future debt crises, saying: “While reducing debts is critical and urgent, policies must lay the groundwork for a lasting way out of debt crises.”
According to Caritas officials, preventing future debt crises requires the adoption of responsible norms and standards for granting and indebtedness, including disclosure and authorization frameworks for debt contracts.
They say that both creditor and borrowing countries have a responsibility to support compliance with such standards through their own laws and policies.
“Borrowers must not continue to bear the brunt of external shocks alone, which are becoming more frequent and put the poorest at risk. Debt contracts must include clauses that fairly allocate the risks of natural disasters and other shocks between creditors and debtors,” Caritas Africa officials say in their statement shared with ICA Africa on October 6.