The Time of Latin America’s Debt Forgiveness (Covid-19)
By Alfredo Serrano Mancilla, Rafael Correa, Álvaro García Linera and Gustavo Petro / Celag
Now that the world has assumed a more humane and cooperative tone in the economic sphere in the face of the Covid-19 pandemic, from the Latin American Strategic Center for Geopolitics (Celag) we request the forgiveness of the sovereign external debt of the countries of Latin America by IMF and other multilateral organizations (IDB, WB, CAF) and we urge international private creditors to accept an immediate debt restructuring process that contemplates an absolute grace period of two years without interest.
The United Nations Conference on Trade and Development predicts a global revenue loss of $ 2 trillion as a result of this crisis. And, for its part, the International Labor Organization estimates that 25 million jobs worldwide are at risk. The outflow of capital from emerging countries continues; it is already at record value: $ 60 billion in less than two months, according to the International Institute of Finance. In the face of so many difficulties, the forgiveness of the external debt is an action as just as necessary. As in other historical times marked by great natural catastrophes, such as wars or diseases and pandemics,
One of the best-known examples is the one that occurred after Germany was devastated in World War II. At the 1953 London Conference it was agreed to forgive substantial amounts of German debt. It was not the only time this has been done throughout our most recent history. There are infinite cases in which external debts were forgiven.
No one can doubt that now is the right time to do it if you want to successfully face this difficult situation. We cannot require countries to make effective public health policies to deal with the current pandemic and, at the same time, expect them to continue meeting their debt obligations. We cannot require them to implement economic policies that compensate for the damages of this catastrophe while they must continue paying their creditors. It is absolutely incompatible to carry out an economic restructuring plan in the near future with the current levels of external indebtedness (on average, it represents 43.2 percent of the gross domestic product in Latin America).
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As was done with the resolution approved on September 10, 2015 on the Basic Principles of Sovereign Debt Restructuring Processes, we must now take a new step and, therefore, from Celag we request the United Nations to most urgently call the General Assembly to discuss a resolution that provides the international legal framework to carry out this effective strategy for the forgiveness of Latin America’s external debt and promote the restructuring process (with a two-year delay) with the private creditors.
We also urge the rest of the international organizations to join this initiative in requesting debt cancellation.
We invite other think tanks, universities, religious institutions, unions, employers and governments to join this request.
It is not only a matter of solidarity, but also of efficiency.
Translated by JRE/EF
Alvaro Garcia Linera
Álvaro Marcelo García Linera is a Bolivian politician and intellectual, who serves as Vice President of Bolivia since 2006.
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