Immediate cancellation of South Asian debts!

8 June 2020 by CADTM , Collective

The coronavirus has unveiled the spectre of a larger crisis. A majority of the planetary economies were already in the throes of over-production, stagnation and even, a recession, which deepened with the day, since the sub-prime crisis of 2008-09. The pandemic has exacerbated the situation. The unemployment figures are rising every day and it is estimated that many small businesses and even a few business corporations will be bankrupt. This health crisis and its cascading economic consequences could well plunge many countries in the South into an unprecedented crisis, pushing millions of people into poverty.

We will be entering a new debt crisis. Already, in July 2019, the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
reported that among low-income countries, 9 are over-indebted and 24 are close to that situation. The external sovereign debt Sovereign debt Government debts or debts guaranteed by the government. in countries of the South is a source of concern, notably because of its dramatic increase within the last two decades and also, due to the similarities with the pre-crisis debt situation of Third World countries in the 1980s. Additionally, the economic crisis means that export-dependent southern countries will find it difficult to earn hard currencies, the remittances are going to reduce significantly and, low financial investments. This will put enormous pressures on the capacity of these countries to service existing debts. The governments will also bail out private corporations adding enormous pressures on the public coffers.

South Asia, is no exception and faces a similar situation. The region faces enormous challenges to deal with the Covid-19 and the post-pandemic situations. The major concern for the region is, obviously, the frail healthcare systems. The daily news of death and infection has intensified the virus fears compounded by the absence of a viable public healthcare system. This is coupled with the widespread poverty, vulnerability, insecurity and precariousness that will surely get amplified with the spread of the pandemic. A gloom surrounds as we complete more than two months of lockdown.

In the region, this disaster is exacerbating the already existing insecurity and precariousness. The region’s public healthcare infrastructures lack the capacity to deal with a pandemic, of such a scale. Due to rampant privatisations carried over the last three decades. South Asia is far deficient of adequate healthcare standards including doctors, nurses, midwives, hospital beds, primary health centres and others. The overwhelming majority of the population do not have access to public healthcare and private healthcare systems during COVID- 19 turned to be more irresponsible and unaccountable by closing the doors for COVID- 19 infected people behaving them as vectors for their hospitals. This has resulted in difficult access to healthcare facilities, particularly women, children and other disadvantaged groups in the society.

Apart from healthcare threats, millions of migrant workers and daily wage earners, across the region, were stranded for months, helplessly, miles away from home, staring at an uncertain future without money, food or jobs. According to the ILO, almost half the global workforce – 1.6 billion people – are in immediate danger of having their livelihoods destroyed. It is clear that South Asia will have a disproportionate share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of such impacts as the regional economies houses the largest number of precarious workforce in the planet. For millions of workers, no income means no food, no security and no future. Millions of businesses around the world are barely breathing and the smaller ones have the least recourse to necessary resources in times of such dire crisis. The self-employed and contract workers are also in imminent danger of seeing their livelihoods disappear.

The multifaceted dangers due to the pandemic can only be faced by rebuilding public healthcare systems, strengthening social protection measures including unemployment benefits and livelihood compensations, especially to those in informal economy and others who are vulnerable. This would entail a huge public expenditure and investments in the social sector, something that has been done away with in the last four decades.
The complications are compounded by the public external debt of the regional economies that has almost doubled between 2009 and 2018, from US$ 366.201 billion to US$ 730.063 billion. This debt is imposed by the international financial institutions (WB World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

and IMF) with the complicity of the ruling classes in our countries. It is noted that most countries spend a huge proportion of their revenues in debt servicing with Sri Lanka and Pakistan having the highest debt to GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
and also, the debt to revenue ratio. The debt crisis will exacerbate an already bad condition with respect to the capability of these countries to pay back their loans. The South Asia itself was already one of the poorest regions. If the present debt burden is not relaxed, the countries in this region will be more vulnerable and trapped in crisis.

As it stands now, the debt crisis has a self-reinforcing dynamic. The rise in debt service Debt service The sum of the interests and the amortization of the capital borrowed. and the deterioration in investment in developing countries will resulted in net resource transfers from the developing countries to the developed countries. This will prevent domestic capital formation and will also result in a drain on valuable foreign exchange earnings.

Any effective fight against the Covid-19 pandemic requires huge resources and therefore, the limited resources of the South Asian countries should be devoted to fight the pandemic rather than reimbursing international creditors. Under these circumstances, we demand the cancellation of all illegitimate debt of the South Asian countries. The UN body dealing with trade, investment, and development issues, the UNCTAD UNCTAD
United Nations Conference on Trade and Development
This was established in 1964, after pressure from the developing countries, to offset the GATT effects.

also recognises that the debts of many countries in the South must be written off. It has also clarified that debtor countries can unilaterally declare themselves in suspension of payments without creditors being able to demand arrears in the future.

The cancellation of external debts of the countries of the region would enable them to free vital resources for rebuilding public healthcare infrastructure, as well as other urgent needs in this economic environment, threatened by sharp drops in income, loss of taxes and revenues and increased expenditure.

It is also necessary to embark on a developmental path that prioritise peoples’ needs over the interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. of the powerful and the propertied class. The resources for such developments could be generated through the cancellation of public debts. A citizen audit is also necessary to identify illegitimate, odious and illegal parties and demand their repudiation. The legal arguments of the state of necessity, fundamental change of circumstance and/or force majeure could be invoked to support such unilateral sovereign repudiation.

We also demand:

1. All Nepal Peasants’ Federation (ANPFa)
2. Alliance for Economic Democracy (AED), Sri Lanka
3. Alliance for Tax and Fiscal Justice, Nepal
4. ARCADE, Senegal
5. Asia-Pacific Regional CSOs Engagement Mechanism- South Asia Working Group
6. Asian Peoples Movement on Debt and Development (APMDD)
7. Association of Development Agencies in Bangladesh (ADAB)
8. Assosa Environmental Protection Association (AEPA), Etiopía
9. ATTAC Japón
10. AwazCDS-Pakistán
11. Bangladesh Adivasi Samity
12. Bangladesh Bhumiheen Samity
13. Bangladesh Kishani Sabha
14. Bangladesh Krishok Federation
15. Bangladesh Nari Progati Sangha (BNPS)
16. Bangladesh Working Group on External Debt (BWGED)
17. Be the Change Organisation, Afganistán
18. Beyond Beijing Committee (BBC), Nepal
19. Bharatiya Muslim Mahila Aandolan (BMMA)
20. CAHURAST, Nepal
21. Centre for Equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. Studies (CES)
22. Centre for Peace Studies, India
23. Children as Zone of peace National Campaign, Nepal
24. CLEAN (Coastal Livelihood and Environmental Action Network), Bangladesh
25. Coastal Association for Social Transformation Trust (COAST Trust), Bangladesh
26. Collective for Economic Justice (CEJ), India
27. Commercial & Industrial Workers’ Union (CIWU), Sri Lanka
28. Committee for the Abolition for Illegitimate Debt (CADTM), India
29. Committee for the Abolition for Illegitimate Debt (CADTM) Asia del Sur
30. Committee for the Abolition for Illegitimate Debt (CADTM), Pakistan
31. Community Self Reliance Centre (CSRC), Nepal
32. Coorg Organisation for Rural Development (CORD), India
33. Crofter Foundation, Pakistán
34. Dabindu Collective, Sri Lanka
35. Dalit NGO Federation (DNF), Nepal
36. Development and humanitarian service for Afghanistan (DHSA)/TKG
37. Democratic Budget Movement (DBM), Bangladesh
38. Development Synergy Institute (DSI), Bangladesh
39. DIGNIDAD Coalition, Filipinas
40. Digo Bikas Institute(DBI), Nepal
41. Environics Trust, India
42. Equity and Justice Working Group (EquityBD), Bangladesh
43. Federation of Community Forestry Users Nepal (FECOFUN)
44. Federation of Media Employee’s Trade Unions, Sri Lanka
45. Feminist Dalit Organization (FEDO), Nepal
46. FIAN Nepal
47. Fight Inequality Campaign, Nepal
48. Fight Inequality Asia del Sur
49. Focus on the Global South
50. Food Sovereignty and Climate Justice Network, Nepal
51. Free Trade Union Development Center (FTUDC), Sri Lanka
52. Freedom from Debt Coalition (FDC), Filipinas
53. Growthwatch, India
54. Hami DajuVai, Nepal
55. Haqooq Khalq Movement, Pakistán
56. Himalaya Niti Abhiyan (HNA), India
57. Hosiery Workers Unity Centre, India
58. Humanitarian Accountability Monitoring Initiative (HAMI), Nepal
59. INCIDIN Bangladesh
60. Indian Oil Petronas Contractor’s Shramik Union
61. Indian Social Action Forum (INSAF)
62. INHURED International
63. Institute for Environment and Development (IED), Bangladesh
64. Jagaran Nepal
65. JusticeMakers Bangladesh
66. Karnali Integrated Rural Development and Research Centre (KIRDARC) Nepal
67. KYRHDO, Etiopía
68. Labour Education Foundation (LEF), Pakistán
69. L’Association Nigérienne des Scouts de l’Environnement ( ANSEN)
70. LDC Least Developed Countries
A notion defined by the UN on the following criteria: low per capita income, poor human resources and little diversification in the economy. The list includes 49 countries at present, the most recent addition being Senegal in July 2000. 30 years ago there were only 25 LDC.
News Service
71. LDC Watch
72. Left Voice (Wame Handa), Sri Lanka
73. Liberation Movement, Sri Lanka
74. Madan Bhandari School of Asia (MBSA), Nepal
75. Maldives NGO Federation, Maldivas
76. Manitham Trust, India
77. mines, Minerals and People (mMP), India
78. Movement for National Land and Agriculture Reforms (MONLAR), Sri Lanka
79. National Adivasi Alliance, India
80. National Alliance for Human Rights and Social Justice (Human Rights Alliance), Nepal
81. National Alliance of Right to Food Networks, Nepal
82. National Campaign for Sustainable Development Nepal
83. National Campaign on Dalit Human Rights (NCDHR), India
84. National Fisheries Solidarity Movement (NAFSO), Sri Lanka
85. National Indigenous Women Forum (NIWF), Nepal
86. National Women Peasants’ Association, Nepal
87. Nepal Climate Change Federation
88. Nepal Institute of Peace (NIP)
89. Nepal Integrated Development Initiatives
90. Nepal Youth Peasants Association
91. NGO Forum on ADB
92. Oxfam India
93. Pakistan Fisherfolk Forum (PFF)
94. Pakistan Institute of Labour Education and Research (PILER)
95. Pakistan Kissan Rabita Committee (PKRC)
96. Pakistan Peace Coalition
97. Participatory Research in Asia (PRIA)
98. Plateforme Haïtienne de Plaidoyer pour un Développement Alternatif (PAPDA), Haití
99. Praja Abilasha Land Rights Network, Sri Lanka
100. Progressive Labour Federation, Pakistán
101. Progressive Plantation Workers’ Union (PPWU), India
102. Progressive Students Collective, Pakistán
103. Resource Centre for Primary Health Care Care Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine. (RECPHEC), Nepal
104. Safety and Rights Society (SRS), Bangladesh
105. Sanayee Development Organisation (SDO), Afganistán
106. SAVISTRI Women’s Organization-Sri Lanka
107. SDGs National Network Nepal
108. South Asia Alliance for Poverty Eradication (SAAPE)
109. South Asia Food Sovereignty Network
110. South Asia Peasants’ Coalition
111. South Asia Tax and Fiscal Justice Alliance (SATaFJA)
112. Swatantrata Abhiyan Nepal (SAN)
113. United Federation of Labour (UFL), Sri Lanka
114. Urja Nepal
115. Uttar Banga Sangrami Biri Sharmik Union, India
116. Voices for Interactive Choice and Empowerment (VOICE), Bangladesh
117. Women Welfare Society (WWS), Nepal
118. Women’s Collective, Pakistán

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