Committee for the Abolition of Illegitimate Debt

We also resolve that we will continue our fight against the capitalist system that creates, exacerbates and sustains inequalities around the region and around the planet. The capitalist system perpetuates and strengthens all social oppressions including patriarchy, racism, casteism, ultra-nationalism, religious fundamentalism and others. This system uses debt not only as a tool for economic subjugation but also for political domination. In fact, capitalism and the oppressive debt system are entwined.

Private indebtedness has developed as the states, crawling under public debt and implementing their neoliberal agenda, have abandoned the funding of social services and their obligation to make sure that the basic needs of the people are met. We reiterate our call for the cancellation of all forms of illegitimate debt – public and private including microcredit debt, peasant debt, student debt, household mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral. debt and others.

More than a thousand women unite against micro-credit at Colombo on February 27, 2020.

Microcredit, which was and still is presented as the solution to get people out of poverty, has had disastrous effects on poor populations in the Global South. With its abusive and predatory interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. and conditions, it plunged these vulnerable people in a debt trap, forcing them to contract multiple loans to pay back for the former ones, and to make huge sacrifices to reimburse them over years and decades. We are aware that women are by far the primary victims of microcredit and we express our solidarity with their struggles against microcredit in Sri Lanka, as well as in Bangladesh, Pakistan and all other parts of the world. We are aware about the ceiling put by the Sri Lankan government on 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. rates on micro-credit however, we affirm that it is still inadequate and fall far short of any decent standards.

We shall struggle against all predatory lending, investment and trade agreements that plunge the ordinary people into a vicious circle of austerity, unemployment and poverty – be these agreements coming from International Financial Institutions, from Global North powers or from emerging powers such as China and India, whose policies have important negative outcomes in South Asia. We demand an end to all sorts of illegitimate lending by the governments, International Financial Institutions, Multilateral Development Banks and others that destroys lives, devastates livelihoods and ruins nature. We reiterate our opposition to the funding of dirty energy including fossil fuels.

We demand an end to all forms of privatisation including the privatisation of water, natural resources, public enterprises, etc. We demand an end to all Public-Private-Partnerships.

We believe that public debt is not bad in itself. Governments can contract loans to finance the ecological transition, to replace fossil energies with renewable energies that respect the environment, to finance land reform, to drastically reduce road and air transport and replace them with collective transport, to finance the creation of decent jobs for all, to guarantee decent public services for all and to guarantee the respect of fundamental human rights of everyone. Public borrowing can thus be legitimate if it is used to finance legitimate projects and if those who contribute act in a legitimate way.

Marching through the streets of Colombo against predatory micro credit.

We call for an audit of the debt involving the social movements and the toiling masses to identify parts of public debt that are illegal, illegitimate, odious, or simply unsustainable. Ordinary people must have the necessary knowledge and power to stop the payment of illegitimate debt and repudiate the latter.
We demand transparency and accountability of all projects financed by overseas lenders and IFIs in South Asia. All such projects should be brought under democratic oversight. The respective parliaments of the countries must ratify the agreements before they are implemented.

We strive for alternative possibilities like subsidies and grants, zero interest loans without discrimination, socially and collectively managed community projects, etc. We call for the renewed development of free, high quality, public services and increases in the funds available for social spending.

Let us unite in our struggles against the illegitimate debt system, free trade agreements that humiliate and exploit the people, plunder and destroy the environment, push whole populations onto penury and destitution.
We extend our solidarity to all labouring masses caught in the infernal webs of illegitimate debts. We resolve to continue our struggle as long as human beings labour under the burden of the debt system, and the financial and microcredit institutions.