Appeals for debt cancellation started in the 1980s and early 1990s for and by poor countries saddled with International Monetary Fund (IMF) Structural Adjustment Programs, which mandated free-market policies such as privatization, free trade, fiscal austerity, and deregulation in exchange for loans. While these policies guaranteed desperately needed funds to recipient countries, they often led to recession, high unemployment, spending cuts on important social services such as education and healthcare, and greater inequality. They were deeply unpopular programs, but calls for debt cancellation went nowhere until an international coalition involving over 60 countries was organized in the late 1990s, calling for cancellation of all debt owed by the world’s poorest countries by the year 2000: Jubilee 2000.
Jubilee 2000 led ultimately to the cancellation of more than $100 billion of debt owed by 35 of the poorest countries, according to Advocacy International, but since that time developing country debt (not only of the poorest) has risen steadily and had reached crisis proportions prior to the onset of the Covid-19 pandemic. At the end of 2018, the total debt of developing countries stood at 191 per cent of their combined GDP — the highest level on record, the UN Conference on Trade and Development reported. Furthermore, much of the debt was caused by global, not internal, economic mismanagement, with the ascent of the so-called shadow-banking sectors — including financial speculators and ‘vulture’ funds — estimated to control about half of the world’s financial assets.
The Covid-19 pandemic has compounded the urgency of an already dire economic situation for these countries and actually stimulated a few steps toward greater debt relief, along with renewed cries for complete debt cancellation. In March 2020, over 300 lawmakers worldwide urged the IMF and the World Bank to cancel the debt of the poorest countries in response to the pandemic, and to increase funding to avoid a global economic meltdown. US Senator Bernie Sanders, who led the initiative with Minnesota Democratic Representative Ilhan Omar, said cancelling these countries’ debt was “the very least that the World Bank, IMF and other international financial institutions should do to prevent an unimaginable increase in poverty, hunger and disease that threatens hundreds of millions of people.” …