The debt burden crushing poor countries will not be alleviated until creditors in rich countries are made to give up some of their wealth
by John Smith
Part 3 - Ask, and thou shalt receive… a kick in the teeth
So far, 44 countries have applied for relief under the DSSI, and a total of $5.4bn in interest payments have been postponed, to be added to their total outstanding debt, which stood at $477bn in 2018. These savings are equivalent to 2.2% of gross domestic product, or about a tenth of the fall in their tax revenues resulting from the pandemic.
To receive relief, DSSI countries must request a suspension of their interest payments, even though the act of making this request brings their creditworthiness into question and invites credit rating agencies to consider downgrading their debt, as has already happened to Ethiopia, Pakistan and Cameroon. Instead of getting debt relief, their borrowing costs have jumped, thereby increasing their debt burden.
According to Eurodad’s Daniel Munevar, the threat of this “is being used to cower debtor countries into submission and force them to repay their debts regardless of consequences to public health. The costs… will be unfortunately measured in the millions of jobs and lives lost, not due to a devastating virus, but to… the global financial system.”