DFI and Norwegian Church Aid launched a new report on how to solve the new debt crisis, at the IMF and World Bank Annual Meetings. The report shows that the crisis is widespread, affecting 114 countries, and concentrated in those countries accessing capital markets (not in former HIPCs). Debt service is far higher than spending on education, health, social protection and climate. Debt to domestic and multilateral creditors are key components in many countries, and will need to be restructured. The report analyses in detail the lessons of past debt relief initiatives, and makes 10 sets of recommendations to ensure that debt relief is: provided to all types of countries, based on their SDG financing needs, negotiated rapidly, including all necessary creditors, and providing protection against lawsuits. In addition, it recommends measures to avoid future crises by maximising accountability to domestic stakeholders; protecting against future predatory and corrupt debts; building country negotiating capacity; and providing lower-cost development financing.

DRI and Oxfam launched the 2022 Commitment to Reducing Inequality (CRI) report, the first detailed analysis of 161 governments’ actions to fight inequality during COVID-19. COVID has increased inequality worldwide, with the poorest hit hardest by the disease and its economic impacts. CRI 2022 shows clearly that most of the world’s governments failed to mitigate this dangerous rise in inequality. Half of lower-income countries saw health spending fall as a % of their budgets, half of countries cut the % of social protection spending, three quarters cut the % of education spending. In addition, two-thirds failed to increase minimum wages in line with GDP, and 95% failed to increase taxes on the richest people and corporations. Only a small group of governments bucked this trend, taking clear actions to combat inequality, putting the rest of the world to shame. For the English report and database, see here. For other language versions of the report, here.

This project, funded by the African Development Bank, was the first to be implemented by DFI as exclusive distributor for Meridian. Its main objectives were to install Meridian, migrate the debt database from CS-DRMS and train Somali debt managers to record, manage and report on their debt portfolio. The new database was drawn from CS-DRMS records and loan balances reconciled with creditors for the 2020 Paris Club exercise. Following two training courses held in Nairobi, DMU staff are using Meridian on the Ministry of Finance’s cloud space, to administer their portfolio and regularly produce a quarterly debt bulletin – one of the pre-conditions for HIPC Completion Point which Somalia reached in December 2023, with total debt savings of $4.5 billion.

Bhutan has been using CS-DRMS since 2005. The project, funded by the Asian Development Bank, aimed to install Meridian in the Development Coordination and Debt Management Division of the Ministry of Finance, migrate the debt database and train users in the use of Meridian. The debt database (comprising external and domestic debt, on-lent loans and grants) was migrated, two training workshops (covering intermediate and advanced use of Meridian) were organised in Thimphu, and a study tour was organised to the Maldives to expose Bhutanese officials to a Meridian site already in operation. Various customised reports were also written for Bhutan’s reporting according to national legislation. At final reconciliation stage, it was discovered that some of Bhutan’s multi-currency loans from a multilateral creditor had not been entered into CS-DRMS according to standard methodology. Work is currently being completed on finalising their re-entry and validation.

This project was funded by the African Development Bank, and due to a funding disbursement deadline was completed in 4 months. Its main objective was to install Meridian, migrate the debt database from CS-DRMS and ensure that staff of the Ministry of Finance and Development Planning can use the new system to manage Liberia’s debt reporting needs. The project was underpinned by two skills transfer and capacity building workshops (each two weeks long) for 15 participants. Although the project was successfully completed, the short implementation period meant that the project recommended continued further capacity-building efforts in a second phase, including extending the database to cover domestic debt, reinforcing staff capacity of staff and strengthening MFDP IT infrastructure.

DFI has renewed its partnership with the World Bank and IMF to implement the Debt Management Facility, which began in 2008. The DMF provides advisory services, training and peer-to-peer learning to more than 80 developing countries around the world to strengthen their debt management capacity, processes, and institutions. DFI participates in workshops and missions to support the implementation of the programme, on such issues as Debt Management Performance Assessments (DeMPA), Debt Sustainability Analysis, Medium-Term Debt Strategies, design of Debt Management Reform Plans, and development of domestic debt markets. Since 2008, DFI has participated in more than 73 missions and workshops. For more details, see the DMF website.

DFI and Oxfam International launched the third edition of the CRI, measuring government commitment to policies which reduce inequality. The key findings of the report are that the COVID-19 pandemic has swept across a world unprepared to fight it, because countries failed to fight inequality. Only one in six countries are spending enough on health, only a third of the global workforce has adequate social protection, and in over 100 countries one in three workers had no labour protection. As a result, many have faced death and destitution, and inequality is increasing dramatically. The report recommends that all governments adopt strong anti-inequality policies on public services, tax and labour rights, to radically reduce the gap between rich and poor. The international community must support them with SDRs, debt relief and global solidarity taxes.

Senior Officials of 12 OIF LICs and LMICs and 4 regional organisations, as well as representatives of Francophone parliamentarians and civil society organisations, held a workshop in Kigali during 10-13 December to discuss their countries’ debt problems and identify urgent advocacy and capacity-building steps to reduce them. The workshop was hosted by the Government of Rwanda, and facilitated by DFI and OIF, with inputs from Afrodad, Cleary Gottlieb, the Commonwealth Secretariat, Eurodad, the IMF, UNCTAD, and the World Bank.  The workshop identified the top priority needs of countries on designing debt policies and strategies; transparency and accountability; mobilising new external finance; domestic and regional market borrowing; and debt restructuring and renegotiation. These needs will be communicated to all participating organisations at a senior level to ensure Francophone countries benefit from the maximum assistance. Participants also agreed on a series of advocacy points about changes needed in the international system to help them avoid or resolve debt crisis, which will be discussed with global leaders during 2020.

DFI and Oxfam met in the Hague to agree a three-year work programme for the Commitment to Reducing Inequality Index, to produce the deliverables needed under the Open Society Foundation grant and as part of their joint partnership. We discussed improving and broadening the methodology to compile and analyse the CRII; as well as key performance indicators at the global, regional and national level, and improvements in communications and fundraising efforts. The outcomes from the meeting will be compiled into a strategic plan early in 2020.

DFI presented on a panel on How to Do Debt Relief Better at the UNCTAD Debt Management conference in Geneva on 19 November. The presentation covered two key issues: why more debt relief is needed; and how to do it better than in the past. DFI urged that debt relief should build on the principles established by the HIPC initiative, but also: be based on SDG funding needs; comprehensively include all types of creditors (including bondholders, China, PPP funders and domestic creditors); and occur more rapidly and with less conditionality. To read the presentation, click here.