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DRGR-Proposal Receives Recognition in Progressive International’s Policy Briefing

In the run-up to the G20 meeting on February 25 and 26, “Progressive International” featured the DRGR proposal in its policy briefing on “Debt Justice at the G20”.

Following the criticism of the G20s own “Common Framework”, the document regards itself as “a call to break with [the] system of neo-colonial exploitation — and an analysis of the G20 obligations to initiate a just debt workout system that 

  • Compels every creditor — public and private — to participate, putting an end to “holdouts” that undermine debtors’ bargaining power in order maximize their profits.
  • Includes all countries facing debt distress — not just the poorest countries who have the cheapest debt.
  • Creates a “workout” process that is transparent and inclusive — rather than one is that by and for creditors.
  • Guarantees “independent debt assessments” that focus on restoring economic capacity, not on cost minimisation.
  • Offers real debt cancellation, instead of diagnosing the debt crisis as a question of liquidity.
  • Includes no austerity conditionalities — conditionalities that have intensified inequalities and hollowed out public health systems.
  • Delivers additional financing for pandemic response and sustainable recovery.” 

At the end of the document, various predominant debt relief proposals are compared in a summary table. The DRGR-idea is featured here as “HBS/SOAC/GDPC”:

Originally published here
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The DRGR-Idea Is Getting Traction

Joe Biden, president of the United States, recently mentioned the general idea of “Debt Relief for a Green and Inclusive Recovery” in an “Executive Order on Tackling the Climate Crisis at Home and Abroad

More precisely, the Executive Order requests the Secretary of the Treasury to:

“ (ii) develop a strategy for how the voice and vote of the United States can be used in international financial institutions, including the World Bank Group and the International Monetary Fund, to promote financing programs, economic stimulus packages, and debt relief initiatives that are aligned with and support the goals of the Paris Agreement;”

The DRGR-Project is willing to lend its advice on how to flesh out these ideas.

Furthermore, debt relief and the link to a green recovery was part of the monthly debate of the EU economic and finance ministers.

The “Politico Brussels Playbook” announced the meeting as follows:

“DEBT RELIEF DEBATE: EU finance ministers are willing to give African countries more debt relief to help combat the coronavirus and will discuss the topic when they convene for the Ecofin Council today. Ministers signaled their willingness to discuss the issue further in a draft policy paper that outlines EU positions ahead of this month’s gathering of G20 finance ministers and central bank governors. “The EU is open to discuss a possible extension of the [Debt Service Suspension Initiative] to reduce the financial pressure on low income countries,” said the two-page policy paper, seen by POLITICO’s Bjarke Smith-Meyer.”

Another report by Politico added:

“Bjarke reports that the debt relief would only be extended in exchange for national reforms to improve countries’ public and tax administration and green their economies, an idea which Commission Vice President Valdis Dombrovskis and Commissioner for Economy Paolo Gentiloni recently floated in a letter to Portuguese Finance Minister João Leão, who chairs the Ecofin during his country’s turn in the rotating Council presidency.”

In the follow-up of the informal videoconference it reads as follows:

“Ministers held an initial exchange of views on the financing and policy priorities for the recovery of low-income countries in the context of an EU Global Recovery Initiative.

The pandemic has raised the issue of how developing and low-income countries can finance their recovery, given that half of low-income countries are currently at high risk of or already in debt distress. Ministers discussed different ways in which the EU and its member states could work together to address these financing gaps for recovery at both global and country level. The discussion built on the conclusions on international debt relief, in particular for African countries, adopted by the Council in November 2020.”

Next to that, Josep Borrell, current High Representative of the European Union, has already published an op-ed on the topic, headlined “Let’s strengthen our ties with Africa”, back in October: 

“We are also pushing for the foreign debt of the most heavily indebted countries to be restructured or written off. African countries do not have the same capacity as Europe to withstand the socio-economic fallout from the crisis by running up a massive budget deficit or providing a substantial monetary policy stimulus. […] 

[M]any countries are still spending more on servicing their debt than on healthcare for their citizens. Some of these countries will need to restructure their foreign debt: this restructuring cannot be unconditional, but it must be substantial.

It culminates in the following conclusions:

“To achieve that aim, we intend to propose that our African partners work with us to ensure that the economic recovery can be green, digital and fair in Africa and Europe alike. […]

At the same time, it will be essential to develop a low-carbon and circular economy in order to meet the legitimate needs of Africans in the long term while also tackling the ecological crisis that currently threatens humanity. And here, Africa’s potential is considerable, be it in terms of sustainable farming, solar energy, biomass or hydropower, although care will also have to be taken to ensure they are exploited in a sustainable way.”

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UNDP Discussion on DRGR-Proposal (Video)

On February 24, UNDP hosted an online-discussion on our proposal for Debt Relief for a Green and Inclusive Recovery. Read the full announcement here.

Three of the report authors, Shamshad Akhtar, Stephany Griffith-Jones, and Ulrich Volz presented its key elements and calls for action.

They were then joined by the UNDP colleagues

  • Luis Felipe Lopez Calva (UN ASG and UNDP Director, RBLAC),
  • Celine Moyroud (UNDP Resident Representative, Lebanon) and
  • Raymond Gilpin (Chief Economist, UNDP Africa).

The discussion was moderated by George Gray Molina (GPN Chief Economist, UNDP). 

Full Video Recording:

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UNDP hosts discussion on DRGR-Proposal

On February 24, UNDP ist hosting an online-discussion on our proposal for Debt Relief for a Green and Inclusive Recovery. Here is the announcement:

The CoP on Poverty and Inequality invites you to a global webinar on Debt Relief for a Green and Inclusive Recovery to discuss the recent report of the same name on Wednesday, 24 February at 8:00 AM EST (2:00 PM CET).

The report, a joint initiative of the Boston University Global Policy Center, the Heinrich Böll Stiftung, and the Centre for Sustainable Finance, ”outlines an ambitious proposal for comprehensive debt relief that includes the private sector and middle-income countries, in an effort to jump start a green and inclusive recovery from COVID-19.” Three of the report authors, Shamshad Akhtar, Stephany Griffith-Jones, and Ulrich Volz, will start the conversation and present the main takeaways and calls for action. We’ll then be joined by UNDP colleagues to discuss findings for UNDP’s work across regions.

SPEAKERS:
Shamshad Akhtar, Report Author, Development Economist and Diplomat
Stephany Griffith-Jones, Report Author, Financial Markets Director at the Initiative for Policy Dialogue and Emeritus Professor
Ulrich Volz, Director of the Centre for Sustainable Finance and Reader in Economics at SOAS, University of London
Luis Felipe Lopez Calva, UN ASG and UNDP Director, RBLAC
Celine Moyroud, UNDP Resident Representative, Lebanon
Raymond Gilpin, Chief Economist, UNDP Africa

MODERATOR: George Gray Molina, GPN Chief Economist, UNDP

24.Feb..2021 08:00 AM in Eastern Time (USA und Kanada)

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DRGR at CNBC Africa

Moritz Kraemer, Senior Advisor to the Debt Relief for a Green and Inclusive Recovery Project and contributor to our report, has been interviewed by CNBC Africa on the way forward for African Debt.

Listen yourself to the interesting conversation, that features the DRGR proposal and reflects the concerns of African bond issuers about market access.

https://www.cnbcafrica.com/2021/covid-19-whats-the-way-forward-for-african-debt/
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Financial Times features Statement on Debt Relief for a Green and Inclusive Recovery

The Financial Times reported about the Statement of 23 former Central Bank Governors and former Finance ministers in favour of Debt Relief for a Green and Inclusive Recovery.
Jonathan Wheatley reports in the FT Blog:

Former finance ministers and central bank governors have called on the G20 and the IMF to step up their support for poor countries battling the economic impacts of the coronavirus pandemic.

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Statement on Debt Relief for a Green and Inclusive Recovery

Statement on Debt Relief for a Green and Inclusive Recovery

The COVID-19 crisis is the biggest threat to human prosperity and a healthy planet in close to a century.

As the world confronts a new wave of the COVID-19 virus, the United Nations reports that many developing countries are forced to deploy 30-70 percent of government revenues to pay off international creditors rather than pursue these broader goals.

The World Bank estimates that upwards of 150 million people could be pushed into extreme poverty by 2021, with 8 out of 10 of these ‘new poor’ in middle income countries.

This is not the time for nation-states to be forced to trade their people and futures for international debt repayments that have ballooned for reasons largely out of their control, putting action on our shared climate change and sustainable development goals on hold.

It is the time to reset and restart our economies in a new direction with inclusivity, climate and development goals at the core of the recovery effort.

To that end, we the undersigned call on the G20 and world leaders to provide debt relief to emerging market and developing countries with unsustainable debt burdens so they can secure fiscal space to combat the virus, protect the vulnerable, and secure a green and inclusive recovery.

We also support a substantial new allocation of the International Monetary Fund’s Special Drawing Rights, accompanied by a significant increase in multilateral and regional development bank financing aided by an increase in those banks’ capital. These measures are necessary to finance health, social protections and climate transitions for emerging market and developing countries in need.

We therefore call on the G20 to enact a Debt Relief for a Green and Inclusive Recovery Initiative that requires bilateral, multilateral, and private sector debt relief on a grand scale analogous to the Highly Indebted Poor Countries Initiative.

A G20 emergency summit on a Green and Inclusive Recovery in response to the debt crisis is overdue. We urge the Italian G20 presidency to initiate such a summit as soon as the Biden administration has come into office.

An unprecedented crisis requires an unprecedented response. It is time for G20 leaders to advance comprehensive debt relief and new financing to secure sustainable development and climate goals.

Signed,

Marion Williams – former Governor of the Central Bank of Barbados

Atiur Rahman – former Governor of the Bangladesh Bank

Salehuddin Ahmed – former Governor of the Bangladesh Bank

Luiz Carlos Bresser-Pereira – former Finance Minister of Brazil

Nelson Barbosa – former Finance Minister of Brazil

Roberto Zahler – former Governor of the Central Bank of Chile

Jose Antonio Ocampo – former Finance Minister of Colombia

Hans Eichel – former Finance Minister of Germany

Patrick Honohan – former Governor of the Central Bank of Ireland

Y.V. Reddy – former Governor of the Reserve Bank of India

D. Subbarao – former Governor of the Reserve Bank of India

Rakesh Mohan – former Deputy Governor of the Reserve Bank of India

Njuguna Ndung’u– former Governor of the Central Bank of Kenya

Andrew Mullei – former Governor of the Central Bank of Kenya

Fazeel Najeeb – former Governor of the Maldives Monetary Authority

Sanusi Lamido Sanusi – former Governor of the Central Bank of Nigeria

Shamshad Akhtar – former Finance Minister of Pakistan and State Bank of Pakistan Governor

Oscar Dancourt – former Governor of the Central Bank of Peru

Jean-Paul Adam – former Finance Minister of Seychelles

Momodu Kargbo – former Finance Minister and Governor of the Bank of Sierra Leone

Rob Davies – former Minister of Trade and Industry for South Africa

Chalongphob Sussangkarn – Former Finance Minister of Thailand

Louis Kasekende – former Deputy Governor of the Bank of Uganda

Note: The statement was featured in the Financial Times