According to the latest Oxfam report, French financial institutions have participated in the new debt crisis affecting the poorest African countries which, despite the global health crisis, remain cornered by their creditors.
“Financial interest rates, human disinterest: the role of private French financial institutions in the indebtedness of developing countries”, titled the NGO Oxfam for its latest report which was published on October 12, and in which the responsibility of hexagonal banks is particularly questioned.
In the midst of the crisis, developing countries are faced with the growing weight of their private creditors. However, nothing has been done to force financial players to lighten this burden. On the contrary, they were able to increase their profits ⤵️https: //t.co/sgXVIPtmmJ
– Oxfam France (@oxfamfrance) October 12, 2021
If the report recalls the implementation of a debt service suspension (the ISSD was adopted urgently by the G20 in spring 2020 to help certain countries focus their resources on the fight against the pandemic), Oxfam deplores on the other hand that this device is limited to “a simple postponement of maturities, without cancellation or lasting restructuring of the debt”.
Countries driven by debt
Also and above all, the NGO notes that the ISSD only concerns public creditors “without private creditors being called upon”. In the midst of the global health crisis, African countries have had to put forward the fundamental rights of their citizens, including access to healthcare, after debt service, denounces Oxfam, which cites several examples in its report, such as that of Ivory Coast. According to the NGO, the country had to pay its creditors, between May 2020 and December 2021, “more than its health budget”, despite the Covid-19 crisis and the country’s membership of the ISSD .
As for Senegal, the annual budget of the Ministry of Health and Social Action would represent less than the only interests perceived by the holders of sovereign bonds of the country. In essence, Oxfam asserts that “the tens of billions of euros, which enrich each year private creditors, are now sorely lacking in the poorest countries to respond to the health crisis and meet the most immediate needs of their populations”.
Responsible French banks?
Bank loans held by French establishments in ISSD-eligible countries have been “quadrupled since 2010”, points out the NGO before noting that on the eve of the health crisis, these establishments received each year “more of $ 200 million in repayments, including nearly $ 40 million in interest ”.
Oxfam also notes that three large French banks – BNP Paribas, Société Générale and the Banque Populaire / Caisse d’épargne (BPCE) group – are among the fifteen global financial institutions that have taken on the largest volume of bond issues in the poor countries eligible for ISSD since January 2011.
“They have placed nearly $ 8 billion on the financial markets, on behalf of eight of the poorest countries on the planet,” says the organization.
In the last part of its 30-page report, the NGO sets out its recommendations to deal with the situation described. Among them is the establishment of “a multilateral mechanism for the restructuring of sovereign debts”. In addition, Oxfam calls on France to “force the French private creditors to take their part in the relief to come”. Finally, the organization advocates the establishment of adequate legislation to protect indebted countries against possible legal proceedings launched by private creditors.