A report initiated by the late Pope Francis has called for changes to the global financial and debt system in what is the Catholic Church's “Jubilee Year”.
The Jubilee Year is a year in which the Catholic Church commits itself to issues of debt, forgiveness, injustice and inequality. In the Old Testament, the law of Moses also refers to a “Year of Jubilee”, which occurs every 50 years and involves the forgiveness of all past debts, the freeing of slaves and the return of ancestral property.
The Vatican’s report is authored by 30 economists, including American economist Joseph Stiglitz and Martín Guzmán, former Minister of the Economy of Argentina. Guzmán, who served in the role from 2019 to 2022, was praised for his efforts at debt restructuring in Argentina.
The report notes that more than 50 developing countries are currently spending at least 10 per cent of their tax revenues on interest payments alone and recommends a number of steps to both fix the current crises and to prevent future crises.
Covid debt relief plans should be extended, the report says, private lenders should no longer be bailed out by taxpayers, and bridging loans should be made available to countries in immediate crisis.
To prevent future crises the report suggests a bankruptcy process for countries, stopping bank bailouts, and improving the quality of loans by ensuring they are used for long-term development.
Guzmán said of the report, “The debt crisis is crowding out investments in health, education, and climate and is making the economic and social situation dramatic in many developing economies.
“Pope Francis’ call was a moral act of timely leadership. In this Jubilee year, a coalition of the willing must act to tackle the debt and development crises or else inequality of opportunity will rise and instability will spiral with worldwide medium-term destabilizing consequences.”
