Cut the Debt

Climate change, which is causing extreme weather events across the world, coupled with the pandemic has left disadvantaged countries struggling. Added to these is a looming debt crisis for low- and middle-income countries where a growing debt burden threatens to drown out social spending.

Much of the current discourse is about “building back better”, “just transition” and “wellbeing” which demonstrates an awareness that we can and must change how we do things for the better. This chance to build back better must be offered to all and yet research shows that many countries are spending more on debt repayments than education, health and social protection combined.

Chart 1 shows 25 countries where this is the case, with South Sudan spending over 11 times more on debt service than on these vital social services as a proportion of GDP. Around one in eight nations spends more on debt than on social services, according to a report from the UN Children’s Fund (UNICEF) who are calling for “debt service relief and restructuring to enable countries to bounce back from the pandemic”. Currently, more than 60 countries spend more on debt financing than they do on healthcare.

The current situation in Sri Lanka highlights the lived reality of this situation. The country is due to temporarily default on foreign debt whilst mass protests take place due to food shortages and power cuts. 

Chart 1: Proportion of debt service to social spending as a percentage of GDP, 2019 

Debt cancellation  

Social Justice Ireland supports the call for the permanent cancellation of all external debt payments due from developing countries, with no penalties, and the provision of additional emergency finance that does not create more debt. Ireland should use its considerable international influence to ensure this debt cancellation happens. 

Inequality Kills  

In advance of the World Economic Forum in Davos each year, Oxfam produce their report on global inequality. This year’s report,” Inequality Kills: The unparalleled action needed to combat unprecedented inequality in the wake of Covid-19” focuses on the rise in inequality in the wake of the pandemic. The report looks at widening economic, gender and racial inequalities, as well as inequality that exists between countries, which, the authors say, are tearing our world apart.  Considering what it terms "economic violence", the report estimates that 5.6 million people die every year due to lack of access to healthcare in poorer countries; hunger kills over 2.1 million people each year; and, by 2030 the climate crisis could kill 231,000 people each year in poor countries.

Ireland is regularly commended by the OECD Development Assistance Committee Peer Review for the effectiveness of our aid programme. We can be justifiably proud of our record of providing high quality, untied, grant-based aid. However, we still lack a strategy for reaching the UN target of 0.7 per cent of national income and Social Justice Ireland calls on government to develop a roadmap with a view to reaching this target. 

We must continue to support the international campaign for the liberation of the poorest nations from the burden of the backlog of unpayable debt and renew our commitment to meet the UN target of contributing 0.7 per cent of national income to ODA by 2027.