The coronavirus crisis is plunging many developing countries into difficulties. As important creditors of these countries, Swiss banks have a responsibility. Together with 10 other Swiss organizations, we are calling on the Swiss government to convene a round table to negotiate the modalities of debt relief.
Joint media release from June 4, 2020
Due to the many negative developments in the global economy, poor countries are facing the worst debt crisis since the 1980s: It was already looming before corona and is now being exacerbated. In March, UNCTAD, the United Nations Conference on Trade and Development, called for an international aid package of 2.5 trillion dollars to combat the health, social and economic crisis in developing countries.
The additional financial resources that have already been provided by multilateral organizations such as the International Monetary Fund (IMF) and the World Bank, but also by individual countries such as Switzerland as part of humanitarian aid and development cooperation, are not enough to adequately counter the crisis in developing countries.
Creditor and donor countries must therefore now also make fiscal and tax policy changes. In recent months, they have put together unprecedented aid packages to save their own economies. Firstly, poor countries have hardly been able to benefit from this and secondly, they do not have the economic policy levers to mobilize comparable corona aid themselves. However, debt relief can be used to quickly mobilize additional funds for the affected countries to combat the crisis.
Switzerland has not granted any bilateral loans to state creditors for a long time and only has very limited influence in the IMF and the World Bank when it comes to shaping their credit regimes. Swiss banks, on the other hand, play an important role as private creditors of states: according to previously unpublished figures from the Swiss National Bank (SNB), the public debt that the 86 poorest countries currently have with forty Swiss banks amounts to a total of CHF 5.7 billion.
Eleven Swiss development organizations are therefore calling on the Federal Council to convene a round table to negotiate the modalities of urgent debt relief for developing countries by Swiss banks. In addition to the interests of the federal government, the lending banks and the debtor governments, the interests of civil society must also be represented at this round table. The concerns of the population groups most affected by the coronavirus crisis in the debtor countries must be given a direct and substantial hearing in the negotiations.
Furthermore, the undersigned organizations demand that the banks involved create transparency towards the public about their loans, their conditions and the modalities of their repayment. This is a matter of public debt that must be borne by the general public in the countries concerned; there is therefore a high level of public interest in this data. In the spirit of policy coherence for sustainable development, which is also enshrined in the UN’s 2030 Agenda for Sustainable Development, the Swiss public also has an interest in this data, as both the SDC Swiss Agency for Development and Cooperation (SDC) and the State Secretariat for Economic Affairs (Seco) are involved in projects in some of these countries as part of their international cooperation.
Signed by terre des hommes schweiz, Alliance Sud, Swissaid, Fastenopfer, Bread for all, Helvetas, Solidar Suisse, Public Eye, KEESA, Solifonds and Multiwatch
Photo: flickr.com/khrawlings – CC BY-NC 2.0
