Latest news with #JubileeCommission
Straits Times
11 hours ago
- Business
- Straits Times
Vatican-backed report seeks financial reform to avert decades of lost development
FILE PHOTO: A woman carries sack of charcoal, as she walks down a busy street, in Jamestown in Accra, Ghana December 6, 2024. REUTERS/Zohra Bensemra/File Photo LONDON - A commission launched by the late Pope Francis has outlined financial reforms it says could help to avert decades of lost development in poor countries that face onerous repayments as global public debts reach record levels. The Jubilee Commission report is published ahead of the once-a-decade United Nations Financing for Development Conference that takes place in Seville, Spain, later in June. The environment for this jubilee-year campaign could hardly be more different from the last - 25 years ago - that yielded billions in historic debt forgiveness. Mariana Mazzucato, a University College London professor and member of the commission, said today's debt crisis was symptomatic of "a broken investment model". "The solution has to be public investment strategies that build productive capacity, domestic value added and sustainable fiscal space," she said. The report recommends measures including more debt suspension initiatives and steps to ensure money from institutions, such as the International Monetary Fund and the World Bank, does not end up flowing from countries to private creditors. It also urges legal changes in London and New York - the jurisdictions for most bond contracts - to disincentivise creditors from refusing to take part during debt restructurings. After the debt forgiveness that followed the previous jubilee campaign, many developing countries, freed of their existing debt, turned to more expensive private lending, and China's lending ballooned. As a result, countries including Sri Lanka, Zambia and Ghana slid into default. A wave of sovereign defaults unleashed by the COVID-19 pandemic - and exacerbated by the pressure of Russia's invasion of Ukraine and a global rate-hiking cycle that boosted borrowing costs - largely crested last year. But the commission said dozens of countries are still squeezing spending to repay debt - with long-term implications for development and social cohesion. Average interest costs for developing countries as a share of tax revenues has almost doubled since 2014, while 3.3 billion people - and more than half of Africans - live in countries that spend more on debt service than health. The system, the commission's leaders said, traps countries in a cycle in which private lenders send cash when times are good - but quickly shut off access when global risk re-emerges. When lenders of last resort, such as the IMF, send money, the commission said that money often goes towards repaying creditors to avoid default. Martin Guzman, commission co-chair and Argentina's ex-Economy minister, said that created a problem for both creditors and debtors. "They don't come to the table with the right conditions for engaging timely and sustainable restructurings, and that aggravates the development crisis," he said. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
The Print
08-05-2025
- Business
- The Print
Pope's death, US aid cuts complicate Vatican's debt relief push
The challenges were highlighted when the Vatican-assembled group, known as the 'Jubilee Commission', presented its draft plan for debt relief and affordable finance at the IMF and World Bank spring meetings last week in Washington. Developing countries are already grappling with shrinking concessional financing and difficulty accessing bond markets due to the selloff triggered by U.S. President Donald Trump's sweeping tariffs. By Libby George and Karin Strohecker LONDON (Reuters) -The death of Pope Francis and global aid cuts led by the United States could complicate the work of a group of experts assembled by the Vatican to bring debt relief and a fairer financing system to the world's poor. Less than a year ago, liquidity concerns for the developing world were a priority at such meetings. But in D.C., concrete, high-level talks to increase the amount of development and finance cash for emerging economies took a backseat. 'For any finance minister, central bank governor of a developing country, it is a depressing takeaway from the meetings,' said Reza Baqir, head of sovereign debt advisory at Alvarez & Marsal, and a former Pakistan central bank governor. Notably, U.S. Treasury Secretary Scott Bessent told the gathering that the world's richest nation had not yet decided whether it would meet a $4 billion commitment to a lending arm for the world's poorest countries. Experts say the shifts could sow the seeds for slow growth and the next cascade of debt defaults. 'More countries will be forced to choose between honouring their debt and ensuring their future,' Paolo Gentiloni, co-chair of the U.N. Expert Group on Debt, said at a panel discussion on the sidelines of the meeting. Investment bank JPMorgan, in a note summarising the meetings, said that 'a new default wave cannot be ruled out by next year' if risks continue rising. 'HAND GRENADE' The group drafting the Jubilee report has postponed its plans to present the initial proposals to the Vatican on May 16 due to Pope Francis's death and the conclave to select his successor scheduled to start on May 7. Those involved said the work – which will include proposals to help defaulted countries restructure more quickly and to expand access to affordable lending – will continue. They are playing a long game, not focusing on quick wins, Commission Chair Joseph Stiglitz said. 'It is clear that we haven't solved the problem in any way,' Nobel laureate Stiglitz told Reuters about the developing world's debt problems, adding that tariff wars amount to a 'hand grenade' whose explosion would hit developing nations the most. The Commission's work this year sharply contrasts with the last 'Jubilee' year in 2000, which yielded billions in historic debt forgiveness to dozens of countries, enabling them to access lending to help their economies grow. China also lent billions to developing economies in that time, leaving a more complex slate of creditors. Now, emerging economies that had been limping out of a default wave sparked by external shocks such as the COVID-19 pandemic and the fallout from Russia's invasion of Ukraine are facing a global economic growth slowdown. A spike in U.S. Treasury yields has shut many out of global bond markets, and made it expensive for the others. The World Bank lists 59 countries worldwide as in or at risk of debt distress, and that does not include some that have run into issues more recently, including countries such as Senegal, Colombia and Indonesia. David McNair, executive director of non-profit advocacy group ONE Campaign, said some of them were putting in place 'very stringent austerity measures' to avoid default. South African Finance Minister Enoch Godongwana told Reuters that the developing world's liquidity problems were high on the agenda for the G20 top economies, which South Africa is chairing, citing an increase in the number of countries requesting IMF balance of payments assistance. But countries with cash – like the United States, the United Kingdom, Germany and France – are cutting aid to boost defence spending. According to the OECD, official development assistance fell 7.1% in real terms last year, and is estimated to drop between 9% and 17% this year. The ONE Campaign estimates it could shrink by 23% by 2027. China's lending is also in flux, after the developing world's default wave and as Trump's tariffs threaten its economic recovery. World Bank President Ajay Banga warned that if the U.S. withholds its pledged funds for the International Development Association (IDA), and Europe also cuts, the $100 billion funding round for the lending arm for the poorest countries could drop to $80-$85 billion. Vera Songwe, chair of the Liquidity and Sustainability Facility who is working with the Jubilee Commission, said the environment for concessional finance and debt forgiveness was undeniably tougher. But some work, such as getting global south development banks to step up funding and pressuring the IMF to include climate in debt sustainability calculations was progressing, though she added the progress was not fast enough and at scale. S&P Global Ratings has warned countries are likely to default more frequently in the coming decade due to higher debt and rising borrowing costs. Rising costs to service debt could cut spending on education, infrastructure and health, which help economies grow. 'Sixty percent of growth is happening in the developing world, middle economies,' Songwe said. 'If there is slowing down, the world slows down with them.' (Reporting By Libby George and Karin Strohecker; Editing by Emelia Sithole-Matarise) Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibility for its content.
Yahoo
01-05-2025
- Business
- Yahoo
Analysis-Pope's death, US aid cuts complicate Vatican's debt relief push
By Libby George, Karin Strohecker LONDON (Reuters) -The death of Pope Francis and global aid cuts led by the United States could complicate the work of a group of experts assembled by the Vatican to bring debt relief and a fairer financing system to the world's poor. Developing countries are already grappling with shrinking concessional financing and difficulty accessing bond markets due to the selloff triggered by U.S. President Donald Trump's sweeping tariffs. The challenges were highlighted when the Vatican-assembled group, known as the "Jubilee Commission", presented its draft plan for debt relief and affordable finance at the IMF and World Bank spring meetings last week in Washington. Less than a year ago, liquidity concerns for the developing world were a priority at such meetings. But in D.C., concrete, high-level talks to increase the amount of development and finance cash for emerging economies took a backseat. "For any finance minister, central bank governor of a developing country, it is a depressing takeaway from the meetings," said Reza Baqir, head of sovereign debt advisory at Alvarez & Marsal, and a former Pakistan central bank governor. Notably, U.S. Treasury Secretary Scott Bessent told the gathering that the world's richest nation had not yet decided whether it would meet a $4 billion commitment to a lending arm for the world's poorest countries. Experts say the shifts could sow the seeds for slow growth and the next cascade of debt defaults. "More countries will be forced to choose between honouring their debt and ensuring their future," Paolo Gentiloni, co-chair of the U.N. Expert Group on Debt, said at a panel discussion on the sidelines of the meeting. Investment bank JPMorgan, in a note summarising the meetings, said that "a new default wave cannot be ruled out by next year" if risks continue rising. 'HAND GRENADE' The group drafting the Jubilee report has postponed its plans to present the initial proposals to the Vatican on May 16 due to Pope Francis's death and the conclave to select his successor scheduled to start on May 7. Those involved said the work - which will include proposals to help defaulted countries restructure more quickly and to expand access to affordable lending - will continue. They are playing a long game, not focusing on quick wins, Commission Chair Joseph Stiglitz said. "It is clear that we haven't solved the problem in any way," Nobel laureate Stiglitz told Reuters about the developing world's debt problems, adding that tariff wars amount to a "hand grenade" whose explosion would hit developing nations the most. The Commission's work this year sharply contrasts with the last "Jubilee" year in 2000, which yielded billions in historic debt forgiveness to dozens of countries, enabling them to access lending to help their economies grow. China also lent billions to developing economies in that time, leaving a more complex slate of creditors. Now, emerging economies that had been limping out of a default wave sparked by external shocks such as the COVID-19 pandemic and the fallout from Russia's invasion of Ukraine are facing a global economic growth slowdown. A spike in U.S. Treasury yields has shut many out of global bond markets, and made it expensive for the others. The World Bank lists 59 countries worldwide as in or at risk of debt distress, and that does not include some that have run into issues more recently, including countries such as Senegal, Colombia and Indonesia. David McNair, executive director of non-profit advocacy group ONE Campaign, said some of them were putting in place "very stringent austerity measures" to avoid default. South African Finance Minister Enoch Godongwana told Reuters that the developing world's liquidity problems were high on the agenda for the G20 top economies, which South Africa is chairing, citing an increase in the number of countries requesting IMF balance of payments assistance. But countries with cash - like the United States, the United Kingdom, Germany and France - are cutting aid to boost defence spending. According to the OECD, official development assistance fell 7.1% in real terms last year, and is estimated to drop between 9% and 17% this year. The ONE Campaign estimates it could shrink by 23% by 2027. China's lending is also in flux, after the developing world's default wave and as Trump's tariffs threaten its economic recovery. World Bank President Ajay Banga warned that if the U.S. withholds its pledged funds for the International Development Association (IDA), and Europe also cuts, the $100 billion funding round for the lending arm for the poorest countries could drop to $80-$85 billion. Vera Songwe, chair of the Liquidity and Sustainability Facility who is working with the Jubilee Commission, said the environment for concessional finance and debt forgiveness was undeniably tougher. But some work, such as getting global south development banks to step up funding and pressuring the IMF to include climate in debt sustainability calculations was progressing, though she added the progress was not fast enough and at scale. S&P Global Ratings has warned countries are likely to default more frequently in the coming decade due to higher debt and rising borrowing costs. Rising costs to service debt could cut spending on education, infrastructure and health, which help economies grow. "Sixty percent of growth is happening in the developing world, middle economies," Songwe said. "If there is slowing down, the world slows down with them." (Reporting By Libby George and Karin Strohecker; Editing by Emelia Sithole-Matarise)
Straits Times
01-05-2025
- Business
- Straits Times
Pope's death, US aid cuts complicate Vatican's debt relief push
People walk in front of St. Peter's Basilica in St. Peter's Square ahead of the conclave, which will be held on May 7, at the Vatican, April 30, 2025. REUTERS/Stoyan Nenov LONDON - The death of Pope Francis and global aid cuts led by the United States could complicate the work of a group of experts assembled by the Vatican to bring debt relief and a fairer financing system to the world's poor. Developing countries are already grappling with shrinking concessional financing and difficulty accessing bond markets due to the selloff triggered by U.S. President Donald Trump's sweeping tariffs. The challenges were highlighted when the Vatican-assembled group, known as the "Jubilee Commission", presented its draft plan for debt relief and affordable finance at the IMF and World Bank spring meetings last week in Washington. Less than a year ago, liquidity concerns for the developing world were a priority at such meetings. But in D.C., concrete, high-level talks to increase the amount of development and finance cash for emerging economies took a backseat. "For any finance minister, central bank governor of a developing country, it is a depressing takeaway from the meetings," said Reza Baqir, head of sovereign debt advisory at Alvarez & Marsal, and a former Pakistan central bank governor. Notably, U.S. Treasury Secretary Scott Bessent told the gathering that the world's richest nation had not yet decided whether it would meet a $4 billion commitment to a lending arm for the world's poorest countries. Experts say the shifts could sow the seeds for slow growth and the next cascade of debt defaults. "More countries will be forced to choose between honouring their debt and ensuring their future," Paolo Gentiloni, co-chair of the U.N. Expert Group on Debt, said at a panel discussion on the sidelines of the meeting. Investment bank JPMorgan, in a note summarising the meetings, said that "a new default wave cannot be ruled out by next year" if risks continue rising. 'HAND GRENADE' The group drafting the Jubilee report has postponed its plans to present the initial proposals to the Vatican on May 16 due to Pope Francis's death and the conclave to select his successor scheduled to start on May 7. Those involved said the work - which will include proposals to help defaulted countries restructure more quickly and to expand access to affordable lending - will continue. They are playing a long game, not focusing on quick wins, Commission Chair Joseph Stiglitz said. "It is clear that we haven't solved the problem in any way," Nobel laureate Stiglitz told Reuters about the developing world's debt problems, adding that tariff wars amount to a "hand grenade" whose explosion would hit developing nations the most. The Commission's work this year sharply contrasts with the last "Jubilee" year in 2000, which yielded billions in historic debt forgiveness to dozens of countries, enabling them to access lending to help their economies grow. China also lent billions to developing economies in that time, leaving a more complex slate of creditors. Now, emerging economies that had been limping out of a default wave sparked by external shocks such as the COVID-19 pandemic and the fallout from Russia's invasion of Ukraine are facing a global economic growth slowdown. A spike in U.S. Treasury yields has shut many out of global bond markets, and made it expensive for the others. The World Bank lists 59 countries worldwide as in or at risk of debt distress, and that does not include some that have run into issues more recently, including countries such as Senegal, Colombia and Indonesia. David McNair, executive director of non-profit advocacy group ONE Campaign, said some of them were putting in place "very stringent austerity measures" to avoid default. South African Finance Minister Enoch Godongwana told Reuters that the developing world's liquidity problems were high on the agenda for the G20 top economies, which South Africa is chairing, citing an increase in the number of countries requesting IMF balance of payments assistance. But countries with cash - like the United States, the United Kingdom, Germany and France - are cutting aid to boost defence spending. According to the OECD, official development assistance fell 7.1% in real terms last year, and is estimated to drop between 9% and 17% this year. The ONE Campaign estimates it could shrink by 23% by 2027. China's lending is also in flux, after the developing world's default wave and as Trump's tariffs threaten its economic recovery. World Bank President Ajay Banga warned that if the U.S. withholds its pledged funds for the International Development Association (IDA), and Europe also cuts, the $100 billion funding round for the lending arm for the poorest countries could drop to $80-$85 billion. Vera Songwe, chair of the Liquidity and Sustainability Facility who is working with the Jubilee Commission, said the environment for concessional finance and debt forgiveness was undeniably tougher. But some work, such as getting global south development banks to step up funding and pressuring the IMF to include climate in debt sustainability calculations was progressing, though she added the progress was not fast enough and at scale. S&P Global Ratings has warned countries are likely to default more frequently in the coming decade due to higher debt and rising borrowing costs. Rising costs to service debt could cut spending on education, infrastructure and health, which help economies grow. "Sixty percent of growth is happening in the developing world, middle economies," Songwe said. "If there is slowing down, the world slows down with them." REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Reuters
01-05-2025
- Business
- Reuters
Pope's death, US aid cuts complicate Vatican's debt relief push
LONDON, May 1 (Reuters) - The death of Pope Francis and global aid cuts led by the United States could complicate the work of a group of experts assembled by the Vatican to bring debt relief and a fairer financing system to the world's poor. Developing countries are already grappling with shrinking concessional financing and difficulty accessing bond markets due to the selloff triggered by U.S. President Donald Trump 's sweeping tariffs. The challenges were highlighted when the Vatican-assembled group, known as the "Jubilee Commission", presented its draft plan for debt relief and affordable finance at the IMF and World Bank spring meetings last week in Washington. Less than a year ago, liquidity concerns for the developing world were a priority at such meetings. But in D.C., concrete, high-level talks to increase the amount of development and finance cash for emerging economies took a backseat. "For any finance minister, central bank governor of a developing country, it is a depressing takeaway from the meetings," said Reza Baqir, head of sovereign debt advisory at Alvarez & Marsal, and a former Pakistan central bank governor. Notably, U.S. Treasury Secretary Scott Bessent told the gathering that the world's richest nation had not yet decided whether it would meet a $4 billion commitment to a lending arm for the world's poorest countries. Experts say the shifts could sow the seeds for slow growth and the next cascade of debt defaults. "More countries will be forced to choose between honouring their debt and ensuring their future," Paolo Gentiloni, co-chair of the U.N. Expert Group on Debt, said at a panel discussion on the sidelines of the meeting. Investment bank JPMorgan, in a note summarising the meetings, said that "a new default wave cannot be ruled out by next year" if risks continue rising. 'HAND GRENADE' The group drafting the Jubilee report has postponed its plans to present the initial proposals to the Vatican on May 16 due to Pope Francis's death and the conclave to select his successor scheduled to start on May 7. Those involved said the work - which will include proposals to help defaulted countries restructure more quickly and to expand access to affordable lending - will continue. They are playing a long game, not focusing on quick wins, Commission Chair Joseph Stiglitz said. "It is clear that we haven't solved the problem in any way," Nobel laureate Stiglitz told Reuters about the developing world's debt problems, adding that tariff wars amount to a "hand grenade" whose explosion would hit developing nations the most. The Commission's work this year sharply contrasts with the last "Jubilee" year in 2000, which yielded billions in historic debt forgiveness to dozens of countries, enabling them to access lending to help their economies grow. China also lent billions to developing economies in that time, leaving a more complex slate of creditors. Now, emerging economies that had been limping out of a default wave sparked by external shocks such as the COVID-19 pandemic and the fallout from Russia's invasion of Ukraine are facing a global economic growth slowdown. A spike in U.S. Treasury yields has shut many out of global bond markets, and made it expensive for the others. The World Bank lists 59 countries worldwide as in or at risk of debt distress, and that does not include some that have run into issues more recently, including countries such as Senegal, Colombia and Indonesia. David McNair, executive director of non-profit advocacy group ONE Campaign, said some of them were putting in place "very stringent austerity measures" to avoid default. South African Finance Minister Enoch Godongwana told Reuters that the developing world's liquidity problems were high on the agenda for the G20 top economies, which South Africa is chairing, citing an increase in the number of countries requesting IMF balance of payments assistance. But countries with cash - like the United States, the United Kingdom, Germany and France - are cutting aid to boost defence spending. According to the OECD, official development assistance fell 7.1% in real terms last year, and is estimated to drop between 9% and 17% this year. The ONE Campaign estimates it could shrink by 23% by 2027. China's lending is also in flux, after the developing world's default wave and as Trump's tariffs threaten its economic recovery. World Bank President Ajay Banga warned that if the U.S. withholds its pledged funds for the International Development Association (IDA), and Europe also cuts, the $100 billion funding round for the lending arm for the poorest countries could drop to $80-$85 billion. Vera Songwe, chair of the Liquidity and Sustainability Facility who is working with the Jubilee Commission, said the environment for concessional finance and debt forgiveness was undeniably tougher. But some work, such as getting global south development banks to step up funding and pressuring the IMF to include climate in debt sustainability calculations was progressing, though she added the progress was not fast enough and at scale. S&P Global Ratings has warned countries are likely to default more frequently in the coming decade due to higher debt and rising borrowing costs. Rising costs to service debt could cut spending on education, infrastructure and health, which help economies grow. "Sixty percent of growth is happening in the developing world, middle economies," Songwe said. "If there is slowing down, the world slows down with them."
