Jubilee Act
Background: Why Debt Relief?When individuals or companies become deeply indebted, bankruptcy provides a safety net that stops them from continually spiraling into further debt. However, countries don't have that option. (Read about the causes of the debt crisis). Most poor countries have fallen so far into debt that it has become impossible for them to climb out. Although most have already paid back more than the sum of the original debt, a massive debt stock still remains in interest. Interest payments divert scarce resources away from poverty reduction: poor countries continue to pay debt service at the expense of the provision of basic services to citizens, many of whom live in extreme poverty and lack necessities such as access to clean water, adequate housing or basic health care. Although wealthy countries provide foreign aid for poverty reduction, this assistance does not make up for the drain on the resources of impoverished countries from debt payment. By the late 1990s, the World Bank estimated that for every $1 in aid to developing countries, more than $7 went back to rich countries in the form of debt servicing. Debt is thus a huge obstacle to the provision of basic services and enactment of measures to reduce poverty and achieve the Millennium Development Goals (MDGs). World leaders took strong steps in 2000 and 2005 to cancel the debt of impoverished countries. Social spending in countries receiving debt relief has risen by 75 percent and its positive effects are already showing. The money freed has been directed toward important poverty-focused initiatives such as fighting global AIDS, enrolling children in school, and providing clean water. In Nicaragua, for example, CRWRC helped one community implement a clean water project that was financed by government funds freed by debt relief. Despite the successes to date, poor countries still pay back an average of $2.30 in debt service for every $1 received in aid. Additional debt relief is necessary for continued poverty reduction and the achievement of the MDGs. The CRC and the Jubilee ActThe biblical concept of jubilee comes from Leviticus: in the Jubilee Year, those enslaved because of debts are freed, lands lost because of debt are returned, and community torn by inequality is restored. While Christians no longer follow the letter of Old Testament laws, the biblical idea of jubilee indicates that permanent and irrevocable poverty is contrary to the will of God. Furthermore, according to our Reformed world and life view, jubilee as a symbol of reconciliation in Christ includes the notion of economic reconciliation. God's people are therefore called to speak and act in behalf of the poor and advocate for an economic structure which prevents such lasting poverty (see Acts of Synod 1999, p. 487). Synod 1999 encouraged the Office of Social Justice to raise awareness in the denomination on the issue of debt relief. OSJ advocated for debt reduction measures in 2000 and 2005, and for the Jubilee Act of 2007, which passed the House of Representatives but did not have enough time to pass the Senate by the end of the 110th Session of Congress. The reintroduction of the Jubilee Act in the 111th Session is our chance to continue to advocate for debt reforms needed for poor countries to meet the Millennium Development Goals. Summary of the Jubilee Act of 2009 (HR 4405)The Jubilee Act for Responsible Lending and Expanded Debt Cancellation (HR 4405) was introduced on December 17, 2009 with strong bi-partisan support. The bill cancels impoverished country debt, prohibits harmful economic and policy conditions on debt cancellation, mandates transparency and responsibility in lending from governments and international financial institutions to prevent another debt crisis, and calls for a U.S. audit of debts resulting from odious and illegitimate lending. Specifically, the Jubilee Act would:
For more information about debt cancellation, read these FAQs or visit Jubilee USA. Take ActionYour voice is needed to make sure that the Jubilee Act passes before the end of the 111th Congress. Ask your representative to co-sponsor the Jubilee Act today! |
Good news! The Jubilee Act for Responsible Lending and Expanded Debt Cancellation (HR 4405) has been reintroduced in the House of Representatives. This bill would give much-needed debt cancellation to 22 additional impoverished countries left out of previous debt relief deals. The passage of the Jubilee Act will urge the Obama Administration to make a new deal on debt so that poor countries can devote scarce resources to fighting poverty instead of massive debt payments.