Vatican-backed report wants debt relief for developing countries

A report initiated by the late Pope Francis has called for changes to the worldwide financial and debt system in what’s the Catholic Church’s “Jubilee Year”.

The Jubilee Year is a 12 months through which the Catholic Church commits itself to problems with debt, forgiveness, injustice and inequality. In the Old Testament, the law of Moses also refers to a “Year of Jubilee”, which occurs every 50 years and involves the forgiveness of all past debts, the freeing of slaves and the return of ancestral property.

The Vatican’s report is authored by 30 economists, including American economist Joseph Stiglitz and Martín Guzmán, former Minister of the Economy of Argentina. Guzmán, who served within the role from 2019 to 2022, was praised for his efforts at debt restructuring in Argentina.

The report notes that greater than 50 developing countries are currently spending no less than 10 per cent of their tax revenues on interest payments alone and recommends quite a few steps to each fix the present crises and to forestall future crises.

Covid debt relief plans needs to be prolonged, the report says, private lenders should not be bailed out by taxpayers, and bridging loans needs to be made available to countries in immediate crisis.

To prevent future crises the report suggests a bankruptcy process for countries, stopping bank bailouts, and improving the standard of loans by ensuring they’re used for long-term development.

Guzmán said of the report, “The debt crisis is crowding out investments in health, education, and climate and is making the economic and social situation dramatic in lots of developing economies.

“Pope Francis’ call was an ethical act of timely leadership. In this Jubilee 12 months, a coalition of the willing must act to tackle the debt and development crises or else inequality of opportunity will rise and instability will spiral with worldwide medium-term destabilizing consequences.”