Financial and Economic Justice
Financial & Economic Justice – Including Tax & Debt Justice under a new financial architecture to finance Social and Climate Justice, Trade Justice and Decent WorkTax justice is needed: progressive tax systems, an end to tax avoidance and evasion, debt justice, financing through ODA/SDR and a more just financial system between the Global South and North; including an international tax body under the auspices of the UN, a sovereign debt work out mechanism, fair trade and full respect for labour rights.
While most people are struggling with the burdens of the pandemic and climate crises – including job loss and lower wages – the earnings and assets of financial traders, many corporations and billionaires have literally skyrocketed. Unless the failures of the international tax system are urgently addressed, countries will continue to lose billions of public revenue dollars from tax abuse by multinational corporations and other illicit financial flows.
In addition, lower tax revenues and currency depreciations, coupled with higher expenditures to combat COVID-19 and deal with ‘natural’ disasters, have led to a sharp increase in the debt of low and middle-income countries. The debt crisis is compounded by the fact that many of the loans are illegitimate – driven by predatory lending, burdened with onerous and inequitable terms, failing to comply with legal and democratic norms, incurred by private corporations but assumed by the public sector, or simply stolen.
Indebted countries must prioritise social needs for the public good and not cut social spending in order to prioritise debt service payments. We need a fair, timely, transparent, binding and multilateral framework for debt crisis resolution, under the auspices of the United Nations, to address unsustainable and illegitimate debt.
Developing countries need access to highly concessional financing, under a fair financial architecture designed to meet the SDGs and deliver the Climate agenda. Economic relations between the Global South and North are characterised by deep inequities especially in trade. This includes supply chains and associated exploitation of workers and the environment. These relations have to be made fair and sustainable for a global economy that promotes well-being of all and of the planet.
Declaration of the GCAP Global Assembly 2023
–Call for Global Justice to Achieve the SDGs
The GCAP Global Assembly 2023 meeting in New York on 20 and 21 September 2023 calls urgent attention to the multiple crises we face as humanity and priority actions needed as a result. These challenges have brought us perilously close to a critical threshold, where ongoing and deepening conflicts in all regions and multiple attacks on human rights defenders threaten our common future and violate fundamental rights of all. Many of the planetary boundaries have been breached, jeopardizing the continuity of life as we know it. This is a consequence of the irreversible impacts of climate change, accelerated biodiversity loss, rising global temperatures and unprecedented monsoon floods as well as environmental pollution.
The COVID-19 pandemic has exacerbated existing economic, social and environmental inequalities highlighting the persistent failures to learn from our mistakes. This is evident in our continued adherence to a development model that disregards human rights obligations of governments and relies on exploitation of people and nature. In the name of economic recovery, unjust policies are being promoted, leading to austerity measures, xenophobia, setbacks in social progress, heightened conflicts, land dispossession from communities and the exacerbation of socio-environmental conflicts for the imposition of megaprojects, monocultures and carbon markets. We denounce complicity between states and transnational corporations which promote fallacious and bogus solutions to the climate emergency.
Download the GCAP Global Assembly 2023 here.
GCAP & 221 civil society groups urge leaders at COP28 to transform public finance
GCAP and 221 civil society groups from 55 countries have sent an open letter calling on world leaders to transform international public finance to tackle climate change and deliver a just energy transition.
The letter, signed by the GCAP, Bretton Woods Project, Oil Change International, Debt Justice, Power Shift Africa, Asian Peoples’ Movement on Debt and Development, and Climate Action Network International, urges heads of state to use COP28 to overhaul global monetary, trade, tax, and debt rules, as well as international financial institutions like the World Bank and International Monetary Fund (IMF).
Released ahead of COP28’s Finance Day on 4 December, when major public finance announcements are expected, the letter warns the current global financial architecture is perpetuating fossil fuel production, locking climate-vulnerable countries into debt, and delaying a just energy transition.
When it comes to funding a just transition to 100% renewable energy systems, the gap between what climate-vulnerable countries have and what they need is vast. Phasing out fossil fuels and scaling up renewable in developing countries will cost an estimated $1.7 trillion a year, and rich countries’ ‘fair share’ of all climate costs in the Global South is calculated at almost $6 trillion a year. Both estimates dwarf the $100 billion a year in climate finance long promised by high-income countries to low-income ones.
The letter states that public money should be used to fund proven climate solutions and prioritise community-led renewable energy, rather than fossil fuels; development banks should be more accountable and democratic; and large scale debt cancellation must be secured.
Finance-related discussions on the table at COP28 include: new pledges to the Loss and Damage fund; sessions on Climate Resilient Debt Clauses, IMF Special Drawing Rights and innovation; and the launch of a new taxation taskforce, led by France and Kenya. Barbados, Kenya and Colombia are among the countries calling for financial system reform.
Read the Letter Here.
Civil Society Advocates for New IMF Special Drawing Rights Allocation at COP28 to Support Countries in Need
At COP28, civil society organizations, academics, and experts are urging world leaders to prioritize the incorporation of IMF Special Drawing Rights as a fundamental aspect of the response to the climate crisis. A statement issued by 120 civil society organizations, including the Global Call to Action Against Poverty (GCAP), and 23 academics and specialists emphasizes:
- A new $650 billion issuance of SDRs for immediate global relief, and regular, periodic SDR issuances to support climate investments;
- The creation of targeted future allocations that distribute SDRs more effectively toward all low- and middle-income countries;
- Reforms to broaden SDR rechanneling mechanisms while minimizing debt and conditions attached to their use.
A growing number of developing countries are spending more on debt service than on climate and social spending, combined. Loss and damage from climate change is already costing climate vulnerable countries nearly $200 billion per year. Despite the G20’s commitment to rechannel $100 billion in SDRs in October 2021, as of October 2023 just $702 million of these funds had actually reached vulnerable countries.
The letter notes the need for a new $650 billion issuance of Special Drawing Rights to help meet urgent and climbing financing needs for developing countries in ways that won’t create additional debt burdens and undue policy conditionality.
At this time of crisis, the letter calls for action on SDRs to go much further than that. How Special Drawing Rights work and how they are distributed is decided according to an unequal global financial architecture. The Vulnerable Twenty (V20) group of countries notes that 68 climate-vulnerable members, while accounting for “21.7% of the global population and 44.7% of IMF programs, have only 5.3% of IMF votes. This unbalanced system harms V20 countries in the allocation of Special Drawing Rights (SDRs).”
The fact that the allocation of SDRs is pegged to the IMF’s quota system means that they are distributed first to those who need them least.
This quota system, rooted in colonial legacies, also determines that those same countries hold the largest voice in IMF decision-making. In a few days’ time, it is expected that the IMF’s Governors will again conclude a general review of quotas without realignment of IMF quota shares. Given the failure of the IMF’s quota review to give a greater voice to climate vulnerable countries, we must call for more ambition at COP28. We can – and must – decide now to change the rules to create an international reserve currency system that works for people and the planet.
Read the Statement Here.
GCAP demands urgent action for Inclusive and Effective International Tax Cooperation
Nov 07, 2023
In a powerful statement, a coalition of civil society organisations including the Global Call to Action Against Poverty (GCAP), and trade unions has come together to support the United Nations General Assembly (UNGA) Draft Resolution on the «Promotion of Inclusive and Effective International Tax Cooperation.» This initiative highlights the critical importance of global efforts to enhance international tax cooperation, providing a path towards fair and equitable fiscal systems for nations worldwide.
The letter underscores the necessity of cooperation and collaboration among nations to address the challenges of our time, strengthen international tax systems and protect public resources. As many as 212 international, regional as well as national organisations covering 68 countries have signed the letter so far.
The coalition’s letter emphasises several key points:
A Call for a UN Tax Convention: The coalition advocates for the establishment of a Member State-led, open-ended ad hoc intergovernmental committee to develop a comprehensive UN Tax Convention. This convention, if realized, would be the world’s first genuinely global agreement on international tax cooperation, ensuring that all nations can participate on an equal footing.
Urgency in the Face of Global Challenges: With the ongoing Covid-19 pandemic, increasing public debt service payments, and rising costs of living, the need to enhance domestic resource mobilization and combat illicit financial flows has never been more critical. The coalition calls for the completion of the UN Tax Convention by June 2025 as an urgent priority.
Holistic Approach to International Tax Cooperation: The coalition supports a UN Tax Convention with a comprehensive scope, flexibility, and resilience to address the evolving landscape of international tax cooperation. This includes tackling issues related to tax-related illicit financial flows and the taxation of income in our increasingly digitalized and globalized economy.
Integration with Key UN Agendas: The coalition emphasizes the importance of connecting international taxation to other critical UN agendas, such as sustainable development, gender equality, environmental protection, and more. Fair and progressive tax systems are seen as fundamental to achieving these global goals.
Inclusive Civil Society Participation: The letter highlights the significance of civil society’s active engagement in the UN tax process. Civil society organisations and trade unions bring essential perspectives, knowledge, and solutions to the table, promoting transparency, fairness, and effective governance in global tax matters.
Click here to download the letter on tax justice signed by GCAP.
GCAP signs statement to cancel the debt of Global South countries now
June 23, 2023
54 countries in the global south are in debt crisis. Debt drains resources away from healthcare, education, social protection, a green just transition and addressing the impacts of the climate crisis, and transfers them to the pockets of foreign creditors. Global south countries are spending 5 times more on repaying debt than they are on addressing the climate crisis. Meanwhile, many countries are being forced to exploit their natural resources, including fossil fuels, to generate revenue for debt repayments.
Debt crises are no accident. From the era of colonialism to the present day, countries in Africa, Asia, Latin America and the Caribbean have been forced to rely on borrowing to make ends meet.
Now rising interest rates, high food and fuel prices, and the impacts of the climate crisis, are making the situation much worse.
Rich countries are not fulfilling their own commitments to give climate finance. They are promoting false solutions. And they are refusing to recognise their climate debt to global south countries. This is a debt they owe for the destruction they have caused to our planet from industrialisation to the present day, only made possible because of the colonial and neo-colonial plunder and exploitation of the global south. The recognition of the existence of a climate debt that the global north owes to the global south should lead to structural and financial reparations, which must be understood as a form of reparative justice rather than ‘aid’.
Climate vulnerable countries are being forced to borrow to cover the costs of their adaptation and mitigation needs, and to cover the costs of addressing Loss and Damage. Much of the meager climate finance made available comes in the form of loans, a clear injustice to the people and communities of the global south who have long suffered the impacts of the climate crisis they did not create. Inevitably, as debts accumulate, debt service also soars, including repayments for many questionable and fraudulent debt-funded projects that have destroyed environments, worsened the climate crisis, displaced communities, and violated human rights.
Global south countries are stuck in a debt-climate trap, while wealthy banks, corporations and institutions profit from this unfair situation. This injustice has to end.
Global south debts must be cancelled to allow governments to tackle the climate crisis, address inequalities and invest in their peoples’ wellbeing.
Rich countries must immediately agree to cancel debt across all creditors, for all countries in need, and without conditions. They have plenty of opportunities coming up to do so: UN General Assembly and SDG Summit (New York, September) , IMF and World Bank Annual Meetings (Marrakech, October) and COP28 (Dubai, December). Only through ambitious debt cancellation can global south governments provide adequate public finance to respond to their immediate and long-term development needs, including the climate crisis. Only with debt justice can we have climate justice.
This year we need to see:
● A comprehensive and rapid debt cancellation process covering private, governmental
and multilateral creditors;
● The enforcement of private lender participation in debt relief through legislation in major
jurisdictions, including New York and the UK;
● Rich countries delivering on their promises to provide adequate new and additional, grants-based climate finance.
GCAP has signed this statement – along with Eurodad, Debt Justice and the Asian Peoples’ Movement on Debt and Development and other organisations.
Join our call to #CancelTheDebt because there is no #ClimateJustice without #DebtJustice!
Sign the statement here: https://forms.gle/ADYxnLFSD6Ag6ftW6
STATEMENT ON GLOBAL WEEK OF ACTION ON JUSTICE AND DEBT CANCELLATION (October 10-17, 2022)
We stand in solidarity with the millions of people in countless countries who have taken to the streets over recent months to demand an end to debt domination and the destructive policies of the International Monetary Fund (IMF), the World Bank and other global lenders. From 14-16 October, the IMF and World Bank will again hold their annual meetings to advance their neoliberal policy reforms, a typically wasted opportunity to take bolder actions in support of debt-burdened, climate-stricken countries in the Global South. The IMF has consistently imposed these reforms amid debt crises rooted in global inequalities and colonial legacies. The Covid-19 pandemic has highlighted and aggravated these long-evolving failures of our public health, social and economic systems, requiring a deep rethink of the practices and conditionalities of the IMF, which have frequently contributed to these failures. Almost three years since the UN declared COVID-19 a pandemic, the world faces a troublesome outlook, more deeply unjust, unequal and unsustainable than before.
The IMF and World Bank continue to largely operate by offering emergency loans instead of meaningful debt cancellation and long overdue reparations for decades of policies that left people poorer and replaced colonialism with economic imperialism. Undue corporate influence has led states to provide massive corporate subsidies and bailouts with little oversight, and rollbacks of environmental protections. The IMF recovery packages have only benefited wealthy corporations, including private lenders, with no relief in sight for peoples weighed down by massive and illegitimate debts, lost jobs, excruciating poverty, collapsing public health systems and intensifying climate events. All global regions, particularly the Global South, have been pushed deeper in multiple crises. This is a resounding indictment of the failed, flawed and futile responses to systemic problems and a clear call for peoples worldwide to push ever more strongly for genuine transformative change.
The ongoing COVID-19 pandemic continues to cost millions of lives and livelihoods especially among those without public support and access to vaccines. Its economic consequences also increased inequality within and between countries. It led debt-dependent countries piling up more loans on top of unsustainable and illegitimate debts accumulated from previous decades. IFIs, bilateral and private lenders have largely contributed through reckless lending, pushing more loans and debt-creating measures. The IMF increased their disbursements of new loans from $8.3billion in 2019 to $31.6 billion in 2020, while other multilateral institutions also increased their loans from $52.2billion to $70.6 billion. Bilateral and private lending actually decreased from 2019 to 2020.
On top of these burdens, the IMF persists in levying millions of dollars of surcharges on countries to which it has made large loans, often in disregard of its own statute and norms, including Argentina, Ecuador, Egypt, Pakistan, and Ukraine, among many others.
In February this year, yet another crisis erupted out of profoundly unequal socio-economic, financial, political and military systems and relations that fracture the world today. Russia’s invasion of Ukraine dramatically worsened the humanitarian crisis worldwide. An estimated 71 million more people are reported to have been pushed into extreme poverty in the wake of dire spillovers of soaring food and energy prices worldwide.
With interest rates spiking, debt accumulation is rising to record-breaking heights. Several countries now deemed to be on the brink of debt defaults, or at high risk of being so, are projected to follow Sri Lanka, Zambia, Lebanon, Zimbabwe and Suriname. They include Argentina, Pakistan, Egypt, Kenya, Ghana and Tunisia – most of which are middle-income countries – showing that all countries need access to debt cancellation. Of the new loans to lower and middle-income countries as of 2020, five times as much debt came from private lenders as compared to bilateral lenders. Private lenders were reported to hold US$2.18 trillion or 63 per cent of the long-term external public debts claimed from them, including US$1.73 trillion in the form of bonds.
This attests to the limitations of the G7/G20’s Debt Service Suspension Initiative (DSSI). It offered nothing to middle-income countries and, because private and multilateral lenders did not take part, it led to less than a quarter of debt payments being suspended for the countries which took part with no reduction in their debt stock.
Upon the DSSI’s expiry in December 2021, participating countries such as Pakistan resumed debt service payments to the governments which had suspended payments, but under even more difficult circumstances, including bigger debts incurred in the last couple of years and higher interest rates that could rise even more at a moment’s notice. No response has been forthcoming from the governments and IFIs who simply continue to “urge” and “encourage” participation in the face of sheer impunity by private lenders.
In November 2020, the G20 approved the Common Framework for debt treatments beyond DSSI, a scheme to, in theory, facilitate debt restructuring for some low- and middle-income countries. In almost two years only three countries, Zambia, Ethiopia and Chad, have applied to the Common Framework, and not a single dollar of debt has been so far restructured or canceled yet. The recent news on the IMF program approvals for Zambia show that debt restructuring or reduction will come at the expense of austerity as well as even greater plunder and impunity for those responsible.
Austerity in its various forms, has pushed impoverished countries into deeper inequality and further debt crises, following IFIs’ conditionality and the dominant neoliberal mindset. This prescription has not changed despite conditions showing the heaviest impacts of austerity measures falling on the most vulnerable and marginalized sectors. Up to 85 per cent of the 107 COVID-19 loans negotiated between the IMF and 85 governments have been found to contain austerity plans to be implemented when the health crisis lifts.
This also comes at a time of increasingly catastrophic climate events, which inflict the most destructive impacts on those least responsible for the climate crisis, the peoples of the Global South. Behind World Bank pronouncements that the Bank will stop financing upstream investments in oil and gas after 2019 are scores of coal, gas and oil projects that it funded and has yet to account for in contributing to climate
change. These projects destroyed rainforests and biodiversity, displaced people and entire communities,
locked many countries in the Global South into dependency on the fossil fuel industry, and contributed heavily to the escalation of the climate crisis. Since the 2015 Paris Agreement, the World Bank invested over $12 billion in fossil fuels, $10.5 billion of which were new direct fossil fuel project finance. Billions more flow to fossil fuels through mixed operations and indirect funding. Some $4 billion, or 35 per cent of the World Bank Group’s fossil fuel assistance since 2015 went to eight G20 countries, several of which provide the largest sources of public subsidies for fossil fuels.
We refuse to be held hostage by the lenders and global rule-makers who are leading us down a path towards greater inequality, impoverishment, deprivation and ecocide. Urgently, we reiterate the calls we as civil society laid out in 2020, demanding –
- Immediate debt cancellation by all lenders – international financial institutions, governments and private lenders – to enable people to deal with the multiple crises; and stronger legislation to make it mandatory for private lenders to participate in debt cancellation;
- Systemic changes in financial and economic systems to stop the accumulation of unsustainable and illegitimate debt, to offer fair and comprehensive solutions to debt crises, and to build more equitable, just and post-carbon societies, including putting an end to lending that leads to the exploitation of peoples and destruction of the environment;
- The immediate delivery of new, additional and non-debt creating climate finance for adaptation, mitigation and loss and damage, far beyond the unmet $100 billion/year pledge, that adequately meets the needs of the Global South;
- Thorough-going national and global review and changes in lending, borrowing and payment policies and practices aimed at preventing the re-accumulation of unsustainable and illegitimate debt, strengthening democratic institutions and processes, upholding human rights and peoples’ self- determination, and bringing the IMF, World Bank and other global lenders to justice;
- Genuine participatory, inclusive debt transparency and accountability mechanisms and processes, including national debt audits, that will critically examine the nature, purpose, terms and conditions, actual use of loans, and the impacts of loan-supported policies and programs;
- The establishment of a fair, transparent, binding and multilateral framework for debt crisis resolution (under the auspices of the UN and not in lender-dominated arenas) that addresses unsustainable and illegitimate debt and recognizes the priority of human rights obligations for all involved;
- Reparations for the damages caused to countries, peoples and nature, due to the contracting, use and payment of unsustainable and illegitimate debts and the conditions imposed to guarantee their collection.
SHOW YOUR SUPPORT AND SIGN NOW: https://bit.ly/DebtGWA2022Statement