Covid-19: Holy See relaunches Pope’s appeal for debt relief for developing nations

Closing of premises during COVID19

By Devin Watkins

July 4 2020

The Holy See relaunches Pope Francis’s appeal for debt relief for nations struggling due to the economic effects of the Covid-19 pandemic.

Archbishop Ivan Jurkovič has renewed the Holy Father’s appeal for debt relief at an international level.

The Holy See’s Permanent Observer to the United Nations in Geneva on Thursday addressed the 67^th Executive Session of the UNCTAD Trade and Development Board.

Multifaceted economic shocks

Archbishop Jurkovič noted that the Covid-19 crisis is putting excessive financial strain on developing nations.

The worldwide economic crisis, he said, presents a unique challenge that has upset the balance of the world economy.

Widespread lockdowns have led to a “deep supply shock”, since many factories and production facilities have been forced to close.

Lockdowns have also caused “consequent demand shocks”, which are the result of people having less money to spend because of vast job layoffs and corporations being unwilling to commit to long-term investment plans due to economic uncertainties.

Worse in developing nations

“There is no doubt,” said Archbishop Jurkovič, “that the current Covid-19 crisis will more severely affect the lives and livelihoods of those in the developing world.”

One way to ease the misery of people in poorer nations, he added, would be to tackle “the crippling external debt burdens” they have accumulated in recent years.

The Vatican representative urged the international community to “deliver speedy and substantive debt relief to crisis-stricken developing countries”.

Archbishop Jurkovič then quoted Pope Francis’ Urbi et Orbi message of 12 April 2020, in which he urged that “all nations be put in a position to meet the greatest needs of the moment through the reduction, if not the forgiveness, of the debt burdening the balance sheets of the poorest nations.”

Inclusive economy on an even playing field

Turning his attention to the global economic system, Archbishop Jurkovič said creating a “more inclusive and sustainable world” requires more than tweaking markets.

“It requires a more exacting and focused agenda that addresses the systemic constraints on resource mobilization and technological diffusion,” he said.

Nations, he added, need to reduce systemic imbalances in market power that result from “the lop-sided rules of a hyper-globalized world.”

They also need to work toward encouraging markets to “match local challenges with international goals.”

Moral crisis

Archbishop Jurkovič called on the international community not to overlook ethical and cultural factors. He said the roots of the current crisis are above all “moral in nature”, rather than merely economic or financial.

“Recognizing the primacy of being over having and of ethics over the economy, the world’s peoples ought to adopt an ethic of solidarity to fuel their actions.”

Short-term vs. long-term

The Holy See’s representative in Geneva then alluded to the shock of the 2008-2009 financial crisis.

“Over the last decade,” he said, “we have learned that excessive liberalization and deregulation, allowing for markets and firms to regulate themselves, privileges short-term gains over long-term commitments.”

The results, he noted, can be seen in decreasing investment in the health sector and in the “predation of the natural environment.”

Debt relief to deal with Covid-shock

Archbishop Jurkovič concluded his speech urging nations and institutional creditors to provide debt relief for developing countries, in order to give them a chance to “respond to the health shock and to mitigate the accompanying economic damage.”

“Whether and how this happens,” he said, “will have direct consequences for creating a fairer, more inclusive and resilient recovery.”