Obscenely rich creditors draining poor countries of funds during pandemic

Blackrock’s assets are worth 2.5 times more than the Gross Domestic Product of the whole of Africa. Poor countries owe nearly one-third of their debts to …

BANKS and hedge funds are draining billions of pounds from poor countries struggling to cope with the Covid-19 pandemic, a report revealed today.

About £10 billion is set to be paid by low-income nations to creditors in the seven months from May to the end of 2020, according to the study by a coalition of campaigns and charities.

The report shows how financial corporations like Blackrock, HSBC, Goldman Sachs, Legal & General and UBS have held developing countries’ feet to the fire over huge debts.

Asset manager Blackrock holds around £770 million of bond debt in Ghana, Kenya, Nigeria, Senegal and Zambia. Blackrock’s assets are worth 2.5 times more than the Gross Domestic Product of the whole of Africa.

Poor countries owe nearly one-third of their debts to private creditors, the study found. Debt relief agreed by G20 countries does not include debts owed to these private companies, which command higher interest rates.

Countries including Zambia have already requested relief from private creditors, but its proposal has been rejected.

The report was issued by Global Justice Now, Catholic Agency for Overseas Development (Cafod), Christian Aid, the Jubilee Debt Campaign and Oxfam.

They are calling for private-sector creditors to be compelled to reduce debts, and for a new international mechanism that would allow quick comprehensive debt restructuring to save the poorest countries £138bn in repayments over the next four years.

Nick Dearden of Global Justice Now said that continuing to collect debts from poor countries that urgently need to focus on public health and welfare during the pandemic was “nothing short of obscene.”

The Inernational Monetary Fund could cover 15 months’ worth of debt repayments by selling less than 7 per cent of its gold reserves, according to the Jubilee Debt Campaign.