The head of the Catholic Church, Pope Francis, on Wednesday urged the international community to intensify efforts to alleviate the debt burdens on low-income countries to prevent them from falling into cycles of poverty and despair.
A recent study noted that global debt reached an unprecedented $313 trillion in 2023, with developing economies hitting new highs in the debt-to-GDP ratio. Speaking at a Vatican conference addressing the debt crisis in the global south, Pope Francis emphasized the severe impact of this issue, which is causing “misery and distress” for millions worldwide.
“To break the debt-financing cycle, it is necessary to create a multinational mechanism … that takes into account the global nature of the problem and its economic, financial and social implications,” the pope stated.
In 2020, the G20 introduced the “Common Framework” to streamline the debt restructuring process and aid impoverished nations. However, progress has been sluggish, exemplified by Zambia’s nearly four-year struggle to emerge from default, offering critical lessons for wealthier nations about the efficacy of their debt relief initiatives.
Currently, there is no comprehensive international law governing global bankruptcies. The pope remarked, “The absence of such a mechanism favours the mentality of ‘every person for himself or herself’, where the weakest always lose.” Citing his own country, Argentina, which has defaulted three times this century, he asserted, “No government can morally require that its people suffer deprivations incompatible with human dignity.”
As the Catholic Church prepares for a Holy Year, or Jubilee, in 2025, Pope Francis has called on affluent countries to commemorate the event by providing debt relief to poorer nations.
Nobel Prize-winning economist Joseph Stiglitz, present at the conference, highlighted how the COVID-19 pandemic and the war in Ukraine have severely impacted the global economy, bringing it to the brink of a new sovereign debt crisis. He argued, “We need a Jubilee debt restructuring and a re-ordering of our global economic architecture to make sure that it doesn’t happen again.”
The global Jubilee 2000 campaign successfully led to $130 billion in debt cancellation for impoverished nations between 2000 and 2015.
