Economic Justice

Many of the world's poorest countries are being driven even deeper into poverty by an accumulating, unjust, and illegitimate debt that they owe to other countries and to international financial institutions. The amount of money that countries in this "debt trap" owe is virtually unpayable.

Creditors offer various debt relief schemes, or new loans, but they come at a high price. Indebted countries must implement programs that promote export-oriented growth, service privatization, funding for health and education that does not run deficits, and the removal of subsidies to their own industries. This erodes health care and education, harms the environment, and further impoverishes poor populations.

Scriptures recognize inequality and poverty in society (Lev. 25, Deut. 15) and call for this injustice to be made right. We need to be vigilant in continuing to push for the cancellation of unpayable debt. For every aid dollar that is sent "south," many more dollars return "north" in the form of debt servicing, and the cost to people in the global South is enormous.

The United Church has been vocal in promoting debt forgiveness. We collected more than 50,000 signatures on the Jubilee 2000 petition asking the Canadian government to cancel unpayable debt. The United Church also collected 40,000 signatures in 2003-2004 on the Beads of Hope petition that, in part, asked the government to cancel the debt burden that undermines developing countries' capacity to respond to the HIV/AIDS pandemic.

Recent Canadian governments have shown some leadership on the debt issue. Canada wrote off $600,000 worth of debt owed by Bangladesh in December 1999, and was the first G7 country to announce that it would cancel 100 percent of the bilateral (country-to-country) debt owed by 11 countries that qualified under the World Bank's Heavily Indebted Poor Country (HIPC) initiative. A February 2005 proposal introduced by then-Minister of Finance Ralph Goodale called attention to the arbitrary conditions required of countries to be recognized under the HIPC initiative, and made "equity of treatment" for non-HIPC countries a cornerstone of Canada's debt remission policy.

We continue to urge the Canadian government to cancel bilateral debts owed to Canada by developing countries, and to ask other northern and western governments and institutions such as the IMF and the World Bank to do the same.

This situation affects us all-if one of our southern sisters and brothers suffers, we all suffer.

• Understanding the Debt Crisis [PDF: 4 pp/37 KB]