Debt: An Intolerable Burden


…Christians will have to raise their voice on behalf of the poor of the world, proposing Jubilee as an appropriate time to give thought … to reducing substantially, if not cancelling outright, the international debt which seriously threatens the future of many nations.

Pope John Paul II, Tertio Millennio Adveniente 51. 1

In response to this exhortation by the Holy Father, and on this most auspicious occasion of the 50th Anniversary of the signing of the Universal Declaration of Human Rights, we, the Catholic Bishops of New Zealand, have turned our thoughts to the growing burden of debt on poor countries.

We consider much of this debt is unjust, that it has reached amounts which are impossible to repay, and that attempts to do so are undermining the very dignity, the hope, and indeed the basic human rights of millions of the poorest members of our human family. It is, in short, an intolerable burden. Even so, we are satisfied that the resources and resourcefulness exist to enable its cancellation.

Therefore, in solidarity with those in severely indebted countries, we add our voice to all those who yearn for justice and an end to this cause of poverty. We call for the cancellation of unpayable debt owed by the world’s poorest countries and urge Christians and all people of goodwill to similarly make their voices heard.

The Ethics of the Matter
Catholic Social Teaching in the area of debt looks to the conditions required for a just contract. That teaching affirms that when one possesses something belonging to another, or where one has unjustly caused damage to another, there exists a debt which must be repaid as a matter of justice.2 However, if the teaching on the morality of debt is to be properly understood, other considerations must be taken into account.

Firstly, we note that for a debt to be valid, the contract and its repayment must have been negotiated in justice, such that both parties enjoyed relative equality. In its recent publication the international Caritas Confederation finds that "current debt management practices are characterised by the creditor’s role as judge and plaintiff". 3 Such a situation leaves the creditor with power and influence far outweighing that of any debtor nation.

Secondly, creditors are also bound to respect the circumstances of the debtor. Debt repayments may not be pursued to a level which undermines the God-given dignity of the debtor. Cardinal Roger Etchegaray, President of the Pontifical Council for Justice and Peace, has expressed it in this way: debt servicing cannot be met at the price of the asphyxiation of a country’s economy, and no government can morally demand of its people privations incompatible with human dignity. 4

Currently we find no regard to the debtor nation’s economic viability or the suffering of its people in either the negotiations on international debt repayment or its relief. There is no independent court or authority which can weigh up the rights and duties of the creditor nations and institutions, the rights and duties of governments, and the human rights of the citizens of the debtor nations. Countries have no capacity to declare themselves bankrupt even where this is effectively the case.

The work of the Church and voluntary organisations in areas of health and education provides overwhelming evidence of the debilitating effects of excessive debt repayments on the funds available for these basic social priorities.

Thirdly, the debtor must not be kept in a state of permanent debt and dependence—this is a form of slavery which is abhorrent and incompatible with basic human rights. The World Bank has acknowledged that 41 countries are simply unable to repay their debts. If the additional costs of providing basic health and education were included in this estimate, this number would be even greater. 5 For many countries, failure to obtain meaningful and urgent debt relief will result in a permanent state of debt and dependence.

We remind all concerned of the fundamental teaching of the Church on economic matters, that "the economy is not a machine that operates according to its own inexorable laws, and persons mere objects tossed around by economic forces". 6

Additionally, one must be very clear about who did the borrowing, and who now is doing the repaying. Loans were sometimes made to non-democratic governments and when the creditors at times positively encouraged the use of loans for armaments, or ignored corruption and nepotism by those at the top, it is clear that the citizens in borrowing countries benefited little.

Yet when repayments are demanded from indebted countries, funds have to be found from the public budget and from export earnings. Resources which would otherwise be available to health and education flow outward and away from these areas of fundamental need. For example the countries of sub-Saharan Africa now transfer to Northern creditors four times more than they spend on the health of their people. 7

At a time when the world celebrates 50 years since the signing of the Universal Declaration of Human Rights and all the hope which that living document embodies, we note that the burden of debt repayment continues to prevent millions from realising "the right to a standard of living adequate for health and well-being", 8 and "the right to education". 9

In short, the origins of Third World debt, the high interest rates, and the social cost of repayment imposed on the poor of debtor countries all combine to suggest that much Third World debt is no longer a debt owed in justice. In the words of the US Catholic Bishops: "in many instances the presumptive obligation to repay should be overridden or modified". 10

The Judeo-Christian Jubilee
In our tradition, we hold a treasure which is the Scriptural call to Jubilee. It is a challenge to celebrate every 50th year through the restoration of land to the landless, the remission of debt and the freeing of slaves. To the Hebrews, Jubilee called for a regular examination of who was suffering in society. It challenged the Jewish community to start afresh, restoring to those people that which was rightfully theirs.

Beneath the three imperatives of Jubilee lies the recognition that the ways we commonly organise ourselves, our societies and our economies, give benefits to some and burdens to others. They are a precursor to the Catholic understanding of social sin, whereby societal structures are ordered in a way which cause some to suffer injustice.

In Catholic teaching the goods of the earth have a universal purpose. They are the gift of God for all humanity. This principle accompanies the right to private property. Indeed, there is inherent in that right a moral duty - a "social mortgage" - to ensure that others do not lack what they need for human life and dignity.

To so urge the remission of debts presumes that something more fundamental than purely economic considerations is required of a just society. Debts must not be pushed to a point which undermines the dignity and well-being of indebted persons. Sectional advantage must never override the common good.

The coming year 2000 has been declared by Pope John Paul II a Great Jubilee - a time for renewal and celebration. For a nation, and for a world, where the gulf between the rich and the poor continues to widen, the call to Jubilee is more relevant now than it has ever been. The remission of unpayable debt would enable such renewal and celebration to be global in a tangible way.

Attempts to apportion blame for the current levels of debt are sterile. Rights and duties exist on all sides. The castigation of international banks, lenders and financial institutions for the profligacy of past lending policies, and the admonishing of debtor governments for deficient economic management or incidents of corruption, will do nothing to alleviate the suffering of the poor in the world’s poorest countries.

The tragedy of massive, unpayable debt is that it takes food from the mouths of those who hunger, books from children eager to learn and medicines from mother and infant, the ill and elderly. In these closing years of the Millennium, responsibility for the creation of a more just world lies with the current generation in the extent to which we can globalise our human solidarity. We must accept the co-responsibility of all economic agents involved in both causing and resolving the international debt. 11

Therefore we state that:

No nation, bank, or international financial institution has the right to extract money for the repayment of debt when this will undermine the basic human dignity and rights of the citizens of that country, particularly the poor.

The cancellation of debts may not be sufficient to bring an end to poverty in highly indebted countries, but it is most certainly a necessary condition.

Without debt relief, the economic liberalisation which we are currently witnessing, will serve only to divide further the wealthy and the poor both nationally and internationally, undermining political stability and the chance of an international economic order based on justice and solidarity.

We appeal to creditor institutions and nations to dispense with the delays and negotiations which have obstructed so many attempts to achieve debt relief, and to make the Millennium year a time to finally cancel the unpayable debts of the poorest nations.

We ask the govenrments and peoples of indebted nations to act with wisdom and courage so that, when debt relief comes, the resources freed will be channelled to the social priority areas of health, education, clean water and sanitation.

We call on the Prime Minister, Rt. Hon. Jenny Shipley, the Government and its Ministry of Foreign Affairs, and Parliament as a whole to address as its most pressing issue of international diplomacy and negotiation during 1998, 1999 and the Millennium Year 2000, the remission of unsustainable debt for the world’s poorest countries. We note and commend the work already done by New Zealand officials in supporting initiatives for debt relief at the meetings of the World Bank. But we seek much more. We ask that this issue be steadfastly promoted in our dealings with the United Nations, the World Bank, the International Monetary Fund, the World Trade Organisation, the Commonwealth Institutions and all other international economic forums of which New Zealand is part.

We strongly urge all Christians and people of goodwill in New Zealand to inform themselves of the burden of debt on poor countries and to add their voices to the swelling tide for change.

Finally, we pray that the advent of a new millennium will not be a hollow and materialistic celebration for those who are gifted with the riches of this world. Rather, may it be a genuine time of Jubilee in which we turn our efforts to ensure that in justice all humanity might have access to whatever is necessary for a fully human existence.

+ Peter J Cullinane, Bishop of Palmerston North

+ Leonard A Boyle, Bishop of Dunedin, President

+ Denis G Browne, Bishop of Hamilton

+ John Cunneen, Bishop of Christchurch, Vice-President

+ John A Dew, Auxiliary Bishop of Wellington

+ Owen J Dolan, Coadjutor Bishop of Palmerston North, Secretary

+ Patrick J Dunn, Bishop of Auckland

+ Max T Mariu SM, Auxiliary Bishop of Hamilton

+ Robin W Leamy SM, Emeritus Bishop of Rarotonga

+ Cardinal Thomas Williams, Archbishop of Wellington

September 1998

1. Pope John Paul II. Tertio Millennio Adveniente (As the Third Millennium Draws Near)
2. New Dictionary of Catholic Social Thought, p262.
3. CIDSE/Caritas Internationalis (1998). Putting Life Before Debt, p17.
4. Pontifical Commission for Justice and Peace (1986). 'At the Service of the Human Community: An Ethical Approach to the International Debt Question
5. CIDSE/Caritas Internationalis (1998). Putting Life Before Debt, p15
6. United States Bishops. Economic Justice for All, 96.
7. UNDP. Human Development Report, (1997).
8. Universal Declaration of Human Rights, Article 25.
9. Universal Declaration of Human Rights, Article 26.
10. USCC Administrative Board (1989). Relieving Third World Debt: a call for co-responsibility, justice and solidarity, 42.
11. Pontifical Commission for Justice and Peace (1986). 'At the Service of the Human Community: An Ethical Approach to the International Debt' Question