British companies driving poorer countries’ debt crisis, says charity

British charity the Jubilee Debt Campaign (JDC) found that 30% of the poorest countries privately owed debts, not including bonds, are owned by firms based in the UK.

The figures emerge as the JDC calculated that developing country debt payments had more than doubled in 10 years, rising from 6.7% in 2010 to 14.3% in 2020. It also noted that 52 countries are in a debt crisis, while 64 spend more on debt repayment than on healthcare.

The figures were drawn from the World Bank’s latest report into debts owned by private lenders.

“Of the 73 countries eligible for the G20’s debt suspension initiative, established last year in response to Covid-19, $65.9 billion (66%) are owed as bonds and $33.4 billion (34%) as other forms of debt,” the JDC noted.

Of the latter figure, $10 billion is owed to lenders based in the UK, “by far the largest amount of debt owed to them of any country.”

The figures do not include bonds, as the World Bank does not provide residency data for bond oners. However, the JDC note, 90% of bonds owed by countries eligible for the G20 scheme are governed by English law. in the case of Ethiopia and Zambia’s international bonds that figure rises to 100%.

Only Chad, Ethiopia and Zambia have applied for the scheme. According to the charity, the majority of their debt payments were made to private lenders, with 33% owed to UK firms, 23% to Chinese companies and 15% to US companies.

While the G20 has asked private lenders to take part in the suspension voluntarily, the World Bank’s figures show that none have done so.

Time Jones, Head of Policy at JDC said that is “unfair for private lenders to keep being paid in full when other lenders have suspended debt payments.”

“Lower income countries are spending $144 million dollars a day on debt payments,” he noted, “private lenders need to be made to comply with international debt relief efforts so that poor countries have the resources they need to tackle and recover from the Covid crisis, and so that further multilateral action on debt relief can be unlocked.”

“As the country in the world with the greatest responsibility for private lenders,” he called on the UK to, “use its presidency of the G7 this year to unblock private participation in debt relief.”

President of the World Bank David Malpass has called on UK and New York to pass legislation to make restructuring debt easier. The Jubilee debt campaign, joined by Christian Aid, Cafod, Oxfam and Global Justice have mirrored the call.