A Matter of Justice: Debt Forgiveness in the Jubilee Year, Intervention of Archbishop Gallagher

Excellencies,

Distinguished participants,

I would like to extend a warm welcome to all of you participating in this event, co-organized by the Permanent Observer Mission of the Holy See and United Nations Trade and Development, and co-sponsored by a number of States. My sincere gratitude goes to our distinguished speakers, whose expertise lends great weight and insight to this High-Level event.

We are meeting during a truly special time: the Jubilee Year celebrated by the Catholic Church. This tradition calls to pause and reflect on justice and mercy. It aims to give hope to a world facing multiple crises. However, hope does not mean to be optimistically naive. Rather, it is a call to overcome political rivalries and work together for the common good.

A more just and equitable future requires us to our relationships and “seek to establish the liberating justice of God in our world.”[1]  In this spirit Pope Francis appealed to cancel or substantially reduce debt during this Jubilee year.[2] The pursuit of debt justice is a moral imperative and a measure of our common humanity. 3.3 billion people – almost half of the world’s population – live in countries that spend more on debt repayment than on health or education.^[3] Therefore, prioritizing those who struggle most under the weight of unjust debt structures is necessary to build a more just and compassionate world.

Excellencies, distinguished participants,

In 2023, global public debt reached US$97 trillion, an increase of US$5.6 trillion from 2022.[4] The accumulation of public debt is a real and tangible burden: interest payments must be met, forcing governments to either cut spending or raise taxes – measures that have a negative impact on their populations.

The global debt crisis is putting immense pressure on many countries who are struggling to pay back their debts. At the same time, the situation is made worse by changes in the creditor landscape. This makes it hard for countries to investment in sustainable development. This trend is worrying for countries already struggling with harsh socio-economic realities. Debt crises in the global South cause misery and hardship denying millions of people a decent future.[5]

The COVID-19 pandemic has increased poverty in developing countries. It has caused huge economic disruption, compelling governments to spend a lot on health and mitigate its socioeconomic impact. As a result some of these countries struggle to pay back interests on their debt. Public debt in developing countries – which reached US$29 trillion in 2023[6] – is growing at twice the rate of developed countries. On top of this developing countries face increasing interest rates. Moreover, rising interest are also affecting public finances in developing countries: over half of these countries spend at least 8 percent of government revenues on interest payments, which are now outpacing growth in vital public services like health and education. During the pandemic, for example, African countries spent just US$39 per person in health, but spent US$70 per person on interest payments on their domestic and foreign debt.[7]

The reality is even grimmer for countries in special situations: Least Developed Countries are vulnerable to global economy shocks; Landlocked Developing Countries’ geographical constraints affect millions; and Small Island Developing States are disproportionately affected by the effects of climate change. For many of these countries, external debt sustainability has worsened, with external debt service increasing by more than 50 percent in 2023.[8]

These countries require a tailored strategy to overcome their challenges. Without such measures, many countries risk remaining trapped in cycles of debt and unable to improve the well-being of their people. As Pope Francis said, “it is not right to demand or expect payment when a country’s people cannot even access basic necessities.”[9]

In addition to public financial debt, there is another, more subtle, and often overlooked form of debt: “ecological debt”. This refers to the disparity between countries in contributing to the ecological crisis. Indeed, many developing countries, home to some of the most important biosphere reserves, continue to fuel the progress of richer countries at the expense of their own present and future.[10]

Excellencies, distinguished participants,

The Jubilee tradition calls for debt cancellation to affirming solidarity and a justice that takes into account the needs and contributions of all, with a view to harmony and peace. The gravity of our current situation demands immediate action. Ambitious debt relief and cancellation should be the aspired goal.

In  this sense a new international financial architecture that is human-centered, creative and based on equity, justice and solidarity is necessary.

“The right to development must be taken into account when considering questions related to the debt crisis of many poor countries. Complex causes of various types lie at the origin of the debt crisis. At the international level there are the fluctuation of exchange rates, financial speculation and economic neo-colonialism; within individual debtor countries there is corruption, poor administration of public monies or the improper utilization of loans received. The greatest sufferings, which can be traced back both to structural questions as well as personal behaviour, strike the people of poor and indebted countries who are not responsible for this situation. The international community cannot ignore this fact; while reaffirming the principle that debts must be repaid, ways must be found that do not compromise the fundamental right of peoples to subsistence and progress.”[11]

I am fully aware that debt relief is a complex issue. The Holy See’s role is not to endorse solutions, but rather to call upon States, the international community, and experts to study the matter with due diligence and to find urgent, effective and consensual solutions. The Holy See will continue to remind that profit is not the only criterion to measure economics. That main criterion is the dignity of the human person.

Thank you very much for your attention.