Open Newswire

Puerto Rico Public Utility Reaches Debt Deal; Congress Could Provide Bankruptcy Protection
1 day 9 hours ago
Communications

Puerto Rico's public utility company, the Puerto Rico Electric Power Authority (PREPA), reached a deal Wednesday with investors to extend debt negotiations. PREPA will pay $416 million immediately and then will have until September 15 to reach a long-term deal. PREPA owes a total of $9 billion in debt. Puerto Rican Governor Alejandro Garcia Padilla announced this week that the island cannot pay its $72 billion debt burden and asked to extend payment terms.

"Without access to US bankruptcy law or emergency financing, Puerto Rico has few options," said Eric LeCompte, executive director of the religious development organization Jubilee USA Network. ‎It's good news that Puerto Rico won't default in the short term, but we need a long term solution."

Meanwhile, Senator Charles Schumer (D-NY) announced Tuesday he will introduce a bill to allow PREPA to access US Chapter 9 bankruptcy protection. Puerto Rico's representative in the US House introduced a similar bill (HR 870) in February. Puerto Rico is currently unable to access bankruptcy protection because it is a territory and not a US state.

"Congress should immediately extend bankruptcy protection to Puerto Rico. The island should have the same protections as any US city or state," LeCompte stated. "Bankruptcy law protects both investors and debtors from crises just like this."

Read more about HR 870.

Read more about Puerto Rico's debt situation.

Nepal Post Earthquake Aid Falls Short of Goals: No Debt Relief Pledged at Nepal Recovery Conference
6 days 10 hours ago
Communications

This week's Nepal donor conference pledged $4.4 billion in aid to Nepal, short of the $6.6 billion Nepal requested for earthquake recovery. About half of the total financing is loans and half is grants. Nepal did not receive any pledges of debt relief while world leaders gathered in Kathmandu. The International Monetary Fund (IMF) said Thursday Nepal will not qualify for its new emergency debt relief trust fund.

"The initial aid pledges are helpful and we can close the $2 billion gap quickly with debt relief," said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. "One of the quickest ways that the World Bank, Asian Development Bank and governments can deliver rebuilding grants is by canceling debt."

Nepal spends $600,000 a day paying its debt, or more than $35 million since the first April earthquake.‎

The World Bank and the Asian Development Bank pledged a combined $1.1 billion in new concessional loans and grants. Nepal already owes the World Bank and Asian Development Bank approximately $3 billion.

Although the World Bank has not announced plans for a debt relief fund, the IMF created the Catastrophe Containment and Relief Trust in the wake of the Ebola crisis and cancelled $100 million of West Africa's debt. IMF spokesperson Gerry Rice said Thursday Nepal met the first requirement for relief but that the earthquake did not cause enough total economic damage. Rice did not reference whether or not damage to Nepal's "productive capacity" pulled another trigger for the fund to release about $23 million in debt relief.

International Monetary Fund Offers No Debt Relief‎ for Nepal
6 days 13 hours ago
Communications

International Monetary Fund (IMF) spokesperson Gerry Rice announced Nepal will not receive debt relief from a special IMF trust fund that helps poor countries when they face natural disasters. The IMF's Catastrophe Containment and Relief Trust cancelled nearly $100 million in debt owed by Ebola-impacted West African nations. Jubilee USA Network, a religious development organization, advocated for the trust fund and debt relief for West Africa and Nepal. A powerful earthquake struck Nepal April 25, killing more than 8,600 people and destroying over 500,000 homes.

"This is troubling news," said Eric LeCompte, a United Nations debt expert and executive director of Jubilee USA Network. "Given the devastation in Nepal, it's hard to believe that the criteria was not met."

Nepal is one of 38 low-income countries eligible for relief from the new fund. To qualify for that relief after a natural disaster, an eligible country must meet certain criteria. The disaster must impact at least one-third of the country's population and either destroy 25% of the nation's productive capacity or cause damage equal to the size of the country's economy. According to Rice, Nepal met the first condition but the earthquake did not cause enough total economic damage. Nepal's earthquake and its aftershocks caused $5-10 billion in damage, about one-third of the country's total economy. However, Rice did not comment on whether or not Nepal's productive capacity met the the threshold to trigger debt relief under the trust.

"This fund was created for situations just like this and debt relief in Nepal could make a significant difference," said LeCompte.‎ "Beyond the IMF, the World Bank and Asian Development Bank who hold about $3 billion of Nepal's debt have unfortunately not announced any debt relief plans yet."

Nepal Conference Hopes to Raise $6.6 Billion in Post Earthquake Aid: Debt Relief Could Be Part of Nepal Recovery Plan
1 week 1 day ago
Communications

World leaders gather in Kathmandu around Nepal's request for USD 6.6 billion in rebuilding aid after a series of spring earthquakes. United Nations Secretary-General Ban Ki-moon is attending June 25 negotiations where Nepal's 3.8 billion debt is on the table as part of an earthquake recovery package. Nepal spends $600,000 a day servicing debt, or more than $35 million since the first April earthquake.‎

"Nepal is requesting relief from some debt payments as a portion of the aid plan," said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. "Nepal's government is being too careful to call for total debt cancellation because of misplaced worries that they'll scare off investors."

Nepal is one of 38 countries eligible for debt relief from the International Monetary Fund's (IMF) new debt relief trust fund. The IMF created the Catastrophe Containment and Relief Trust to relieve a country's debt payments when a natural disaster impacts a third of the country's population and destroys 25% of the nation's productive capacity. If Nepal qualifies for the trust, it could receive $23 million in debt relief of the $54 million it owes the IMF.

"Nepal's rebuilding efforts are a perfect example of why the International Monetary Fund set up this new emergency debt relief trust," shared LeCompte, who serves on United Nation finance expert groups. "We now need to see the World Bank and Asian Development Bank step up to the plate, as the two groups hold three billion in Nepal's debt."

Nepal owes $1.5 billion to the Asian Development Bank and another $1.5 billion to the World Bank. Jubilee USA Network is petitioning the World Bank to grant debt relief for Nepal and to create an emergency debt relief fund. The World Bank pledged $500 million in loans to finance Nepal's reconstruction.

UN ‎Debates Debt and Tax Prior to Historic Development Conference
1 week 6 days ago
Communications

UN negotiators struggle to find consensus on debt, trade and tax policies on the last day of scheduled negotiations before heads of state, business leaders and development organizations meet for the July Financing for Development (FfD) conference in Addis Ababa, Ethiopia.

"These meetings offer a rare opportunity to raise needed resources to confront extreme poverty," said Eric LeCompte, executive director of the religious development organization Jubilee USA Network. LeCompte was in New York for the negotiations. "More than a trillion dollars can be raised annually if we win policies that promote responsible lending and curb corruption and tax evasion."

In 2013, developing countries spent $680 billion paying off debt but received just $134 billion in official aid, according to the World Bank and the Organization for Economic Cooperation and Development. A key issue in the FfD debt negotiations is responsible lending and borrowing. The United Nations Conference on Trade and Development developed principles for responsible lending and borrowing that could be endorsed in the final Financing for Development agreement.
"Publicly passed budget and lending transparency protects the vulnerable and raises billions in the developing world," said LeCompte, who served on the UN Conference on Trade and Development expert group that created the principles on responsible lending and borrowing. "We strongly urge world leaders adopt these accountable lending and borrowing principles."

The most recent FfD text calls for global efforts to stem revenue lost to crime, corruption and tax evasion. Developing countries lose nearly $1 trillion each year to these "illicit financial flows," and sub-Saharan Africa alone loses $50 billion annually. A new study by the research organization Global Financial Integrity finds that these flows harm the world's poorest countries the most.

G7 Calls for Greater Global Economic Stability
3 weeks 2 days ago
Communications

 G7 Heads of State released their annual Declaration as their summit finished in Bavaria, Germany. The summit focused on rising debt levels and risks to global economic stability amid geopolitical tension around the world. They call for halting corruption and tax avoidance, reducing debt to more sustainable levels and increased transparency.

"We support the words of the G7 to address tax and debt issues to build a more stable and transparent global economy," stated Eric LeCompte, executive director of the religious anti-poverty coalition Jubilee USA Network. "We now need the G7 to turn those words into action."

G7 leaders discussed Greece's ongoing debt crisis at the summit. Greece is currently in negotiations for emergency funding from the European Union, European Central Bank and International Monetary Fund. It is the most indebted country in Europe.

At G7 Summit Trade and Debt Policies Take Center Stage ; Bishops Call on G7 to Enact Global Bankruptcy Process to End Poverty
3 weeks 6 days ago
Communications

 The upcoming G7 summit focuses on global economic issues and conflicts in Ukraine and the Middle East. Pending international trade agreements and ongoing debt crises around the world will dominate the ‎conversation.

"Debt, tax and trade issues will take center stage at this year's meeting," noted Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. LeCompte was in Dresden, Germany, for last week's G7 Finance Ministers gathering. "It's right that economic stability is a priority on the agenda. Inequality and poverty drive conflict and instability around the world."

Prior to the summit, G7 Finance Ministers met in Dresden, Germany, to address debt and tax issues. ‎During the finance minister meetings, Jubilee Germany organized a prayer service led by Dresden's religious leaders that German Finance Minister Wolfgang Schäuble attended. The Dresden Catholic Bishop and leading Protestant Bishop called on the G7 to enact a global bankruptcy system for countries to address global poverty and inequality.

FIFA Scandal Highlights Corruption in Global Financial System ; US Banks Named in FIFA Indictment
4 weeks 13 hours ago
Communications

The President of international soccer's governing body, the Federation Internationale de Football Association (FIFA), is resigning amid corruption allegations. Sepp Blatter led FIFA for 17 years before resigning June 2 after winning re-election to another term as the organization's leader. Just before his resignation, Swiss authorities arrested seven FIFA executives as part of an FBI probe that indicted 14 people on bribery and corruption charges. Twenty-six banks are named in the indictment, including major US firms such as Citigroup and JP Morgan Chase.

"This level of corruption was only possible with the complicity of the global banking system," said Eric LeCompte, executive director of the religious development organization Jubilee USA Network. "The FIFA scandal shines a light on how corruption is protected and supported by US banks."

The corruption and bribery charges relate in part to FIFA's process for awarding world cups to host nations. Authorities are investigating South Africa's 2010 World Cup as well as upcoming World Cups in Russia in 2018 and Qatar in 2022. More than $150 million in FIFA bribes flowed through the US financial system, but in only one instance did a bank reject a money transfer out of suspicion. While US investigators are still determining if any banks broke US law, experts indicate that the transactions were likely structured to avoid triggering US anti-money laundering alarms.

The indictment also alleges that defendants used shell companies to move bribe money around the globe. The United States is currently one of the easiest countries in the world in which to open a shell company without disclosing the company's true owner. Jubilee USA supports bipartisan legislation to address shell companies - the Incorporation Transparency and Law Enforcement Assistance Act.

G7 Finance Ministers Focus on Growth in Face of High Debt
5 weeks 1 day ago
Communications

G7 finance ministers gather in Dresden, Germany, to discuss promoting "sustainable growth" in the face of growing global debt. US Treasury Secretary Jacob Lew is among the ministers gathering. The meeting takes place amid debt crises in the Eurozone and the developing world. The ministers meet after the International Monetary Fund (IMF) reported slow economic growth and increased debt burdens during the IMF/World Bank Spring Meetings.

"‎It's impossible to experience sustainable growth, when wealthy and poor countries are struggling with unsustainable debts," stated Eric LeCompte, Executive Director of Jubilee USA Network, who is in Dresden for the meetings.

The finance ministers gathered in Dresden include Joe Oliver of Canada, Michel Sapin of France, Wolfgang Schäuble of Germany, Pier Carlo Padoan of Italy, Taro Aso of Japan, George Osborne of the United Kingdom and Jacob Lew of the United States. Jubilee USA joined Jubilee Germany in Dresden for several G7 outreach events organized on the growing debt crisis.

Devastated Nepal Daily Pays $600,000 on Debt
6 weeks 6 days ago
Communications

According to the most recent public World Bank figures, Nepal pays $594,000 a day in debt payments as cited by the religious development organization, Jubilee USA Network. World Bank figures report that Nepal owes $3.8 billion in foreign debt and in 2013 paid $217 million in debt payments, or nearly $600,000 a day. Nepal was already one of the world's poorest countries, ranking 145th out of 187 countries listed on the United Nations Human Development Index, before an April 25th earthquake hit the country killing more than 8,000 people. On Tuesday another earthquake of 7.3 magnitude killed more than 100 additional people in the country.

"It's mind-blowing that one of the poorest countries in the world, struggling with earthquake recovery, pays $600,000 a day on debt," said Eric LeCompte, Executive Director of Jubilee USA. "That's $4 million a week that could be going toward recovery and rebuilding."

As Nepal scrambles to rebuild before the approaching Monsoon Season, it finds itself in debt to the tune of $1.5 billion to the World Bank and another $1.5 billion to the Asian Development Bank. The country also owes $133 million to Japan and $101 million to China.

"The World Bank and Asian Development Bank must immediately cancel these debts," stated LeCompte, who serves on United Nations finance expert groups.

Governments Negotiate UN Agreement on Global Development
7 weeks 1 day ago
Communications

IMF's Lagarde and World Leaders Will Attend Historic Ethiopia Summit

The United Nations, International Monetary Fund (IMF), World Bank and finance ministries are meeting in New York to finalize an agreement for the Financing for Development Conference (FfD) to be held in Addis Ababa, Ethiopia, in July. The summit seeks to tackle global poverty and features the IMF's Christine Lagarde, heads of state, business leaders and humanitarian groups such as Jubilee USA Network. Pope Francis has committed to attend the Sustainable Development Goals Conference to follow up on the commitments from the Financing for Development process.

"These negotiations are critical for billions of people living in poverty," said Eric LeCompte, executive director of the religious development organization, Jubilee USA Network. LeCompte and Jubilee USA are involved in negotiating the FfD outcome document. "This is a rare opportunity to create a binding global plan to drastically diminish poverty in our lifetime."

This summer's conference is the third Financing for Development summit. The first summit was held in 2002 in Monterrey, Mexico. It produced the "Monterrey Consensus," which laid out six areas of development financing. The 2008 summit in Doha, Qatar, led to commitments from developed nations to continue aid to developing nations and to address a number of systemic global economic concerns that contribute to global poverty such as debt, trade and tax issues. As the United Nations Millennium Development Goals expire, current negotiations continue to focus on these "systemic" issues in the form of domestic resource mobilization, or supporting developing countries to raise more revenue in their countries.

World Bank and IMF Announce $1.1 Billion in Debt Relief for Chad
9 weeks 15 hours ago
Communications

The International Monetary Fund (IMF) and the World Bank announced $1.1 billion in debt relief for Chad. The money comes through the IMF and World Bank's two major debt relief programs: the Heavily Indebted Poor Country Initiative (HIPC) and the Multilateral Debt Relief Initiative (MDRI). Chad is the 36th country to receive HIPC relief and the first since 2012. Chad is the fourth-least developed country in the world. More than half its population lives in poverty.

"Debt relief for Chad means an investment in education and healthcare," said Eric LeCompte, executive director of the religious debt relief organization Jubilee USA Network, which advocated for the IMF and World Bank debt relief programs. "This is an important way to give Chad's people help."

As of 2013, Chad owed $2.2 billion to foreign lenders and spent over $100 million annually paying off debt. Prior to receiving debt relief, Chad owed around $800 million to the World Bank and $400 million to the African Development Bank. Chad also owes approximately $500 million to other governments. Under the relief plan, Chad receives $18 million in debt relief from the IMF, nearly $600 million from the World Bank and $236 million from the African Development Bank. Thirty-nine countries are eligible for HIPC debt relief. Qualifying countries must meet certain criteria and implement poverty reduction plans. Chad was granted relief even though it didn't meet all criteria. Critics of these plans argue that to qualify for debt relief, countries should not reduce any budget areas that protect vulnerable populations. The three other qualifying countries yet to receive relief are Sudan, Somalia and Eritrea.

Aftershocks Pummel Highly Indebted Nepal: Poor Country Spends 217 Million Annually on Debt Payments
9 weeks 3 days ago
Communications

Severe aftershocks continue to terrorize Nepal which was struck by a 7.8 magnitude earthquake on Saturday. The rising death toll climbed beyond 3,000 people. Nepal is one of the least developed countries in the world, ranking 145th out of 187 countries in the United Nations Human Development Index. According to the World Bank, Nepal owes $3.8 billion in debt to foreign lenders and spent $217 million repaying debt in 2013. Nepal owes approximately $1.5 billion each to the World Bank and the Asian Development Bank and $54 million to the International Monetary Fund (IMF). It owes $133 million to Japan and $101 million to China.

“Nepal is one of the least developed countries in the world and needs immediate financing to recover,” said Eric LeCompte, executive director of the religious development coalition, Jubilee USA Network. "Relieving Nepal's debts not only provides resources now, but can also help the country rebuild."

Nepal is one of 38 countries eligible for assistance from the IMF's new Catastrophe Containment and Relief Trust (CCR). The IMF created the CCR in February to provide debt relief to poor countries impacted by natural disasters or health crises. The new fund canceled nearly $100 million in debt for Ebola-impacted countries. In order to qualify for relief from the new fund after a natural disaster, a country must meet certain criteria. The disaster must destroy more than 25% of the country's "productive capacity," impact one third of its people or cause damage greater than the size of the country's economy. It is not yet known if Nepal will qualify. Of the $54 million Nepal owes the IMF, $10 million is due in 2015 and nearly $13 million is due in 2016.

World Bank Announces Package of Aid and Loans to Ebola-Affected Countries
10 weeks 6 days ago
Communications

As the Spring International Monetary Fund (IMF) and World Bank meetings open, the World Bank announced $650 million of new grants and concessional loans to the countries of Sierra Leone, Guinea and Liberia. About $220 million will be aid in the form of grants and the remainder will be in the form of highly concessional loans. Currently the three countries owe a combined $518 million to the World Bank. Liberia owes $105 million, Guinea $186 million and Sierra Leone $227 million.

“We urge the World Bank Group to consider bolstering their commitments with a new debt relief package for the impacted countries,” said Eric LeCompte, executive director of the religious development coalition, Jubilee USA Network. “We applaud the new aid for the affected countries and hope that the World Bank can come up with some rapid response plan to address this kind of crisis much faster in the future.”

The new financing is through the World Bank's International Development Association (IDA). The IDA determines its lending terms based on the borrowing country's risk of "debt distress." The new IDA financing will be distributed as approximately 50% grants to Sierra Leone and Guinea and 100% as loans to Liberia. The loans will be repaid over 25 to 38 years. In February, the IMF announced $100 million in debt relief for the three West African countries and called on governments to contribute $70 million more. The IMF also set up a new debt relief fund for poor countries struck by natural disasters or health crises.

IMF Reports Debt and Human Crises Drive Uneven Growth
11 weeks 1 day ago
Communications

Global Stability and Economic Outlook Reports Released

The International Monetary Fund (IMF) released its Global Financial Stability Report, noting "increased financial stability risks" in the global economy. The report notes that large-scale economic shocks are particularly concerning to global stability. It argues that such risks are greatest for countries with high debt levels and that emerging market countries must be prepared for external shocks. Particular concern is raised on the consequences of currency volatility, the shadow financial system and high corporate debt. The report is a follow-up to the IMF's semi-annual World Economic Outlook Report, which noted uneven global growth, particularly among developing economies.

"The IMF recognizes we need global structures to protect us when there's a major crisis," said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. "Countries with high debt levels are the most vulnerable to those crises."

The Global Financial Stability Report focuses on the systemic issues that create global economic trends. It notes that debt levels are rising in emerging markets and that increased risks over the past six months are impacting those countries the most. It argues that policy measures are necessary to "contain financial excesses" in global markets and to improve growth.

"The IMF is concerned that inequality persists, especially in the developing world" said LeCompte. "The IMF notes that the key to stability is addressing debt and tax policies that underlie uneven growth."