Papua New Guinea's debt and that of the world

In Oceania too, dependence on creditors has grown, a problem at the centre of Pope Francis' appeal for the Jubilee 2025. With clear political will, the serious situations in other countries could still be avoided, but there is still little awareness. On 24 May, a global 24-hour “Relay for Peace” will start from Samoa to raise awareness.

Port Moresby (AsiaNews) - Papua New Guinea owes creditors about fifty billion Kina as the country prepares to celebrate the fiftieth anniversary of its Independence in September. The country’s sound financial status of the first twenty years after Australian colonisation, with the national currency basically equivalent to the US dollar or more, is a distant memory.

The country is classified as resource rich, but with poor human development indicators. Some 75% of the population lives in poverty or with only essential means of survival, frequently in remote and inaccessible areas deprived of basic services. The debt accumulated in recent years is split roughly in equal parts between domestic and external.

The perception that it is at least partly driven by corruption and mismanagement is strong in the country. Acquiring government positions and jobs is widely perceived as an opportunity for personal enrichment, with family, clan and associates benefiting in any way possible. With a clear political will, however, Papua New Guinea can still reduce corruption, control its debt and avoid the worst outcomes seen in other developing countries which are now even unable to pay the interests on their debts.

Facing this type of global concern, on 23rd December 2024, one day ahead of the kick-off in Rome of the Jubilee Year 2025, Caritas Internationalis launched the campaign, Turn Debt into Hope.

Pope Francis had in fact stated in his Bull of Indiction of the Jubilee Year 2025 on 9th May 2024: “Another heartfelt appeal that I would make in light of the coming Jubilee is directed to the more affluent nations. I ask that they acknowledge the gravity of so many of their past decisions and determine to forgive the debts of countries that will never be able to repay them. More than a question of generosity, this is a matter of justice... If we really wish to prepare a path to peace in our world, let us commit ourselves to remedying the remote causes of injustice, settling unjust and unpayable debts, and feeding the hungry.” (Spes non confundit, 16).

According to Caritas Internationalis, one of the largest humanitarian networks in the world, there are some essential key facts about the current debt crisis involving over one hundred countries which need to be known and understood. The International Monetary Fund and World Bank estimate that 60% of low-income countries are at or near the point of “debt distress” where they cannot meet their repayment obligations.

A staggering forty-eight developing countries spend more on debt interest payments than on health and education, further entrenching inequality and poverty. More than 3.3 billion people live in these countries. Rich countries own most of the debt, but the cost of borrowing is two to twelve times higher for developing countries, trapping many of them in a cycle of debt, which is on the rise.

Following cases of predatory lending, the economic effects of the COVID-19 pandemic and global inflation, governments are much more indebted than ever before. In 2023, countries in the Global South spent 12.5 times more on debt servicing than on tackling climate change, leaving them vulnerable to its devastating impacts.

The Caritas’ Turn Debt into Hope campaign calls for a bold commitment from governments and financial institutions to stop the debt crisis now by: cancelling and remedying unjust and unsustainable debts, so as to prevent debt crises from happening again by addressing their root causes; reforming the global financial system to prioritise people and the planet; and by establishing a permanent, transparent, binding and comprehensive debt framework within the United Nations. A petition in support of the campaign can be signed online at: turndebtintohope.caritas.org

A particular objective of the campaign is the remittance of “unsustainable debt”, meaning debt that cannot really be paid back. Caritas Internationalis will advocate for debt forgiveness at different fora during the year 2025 and beyond: “Internationally, we’ll take this petition to places where world leaders gather to discuss politics and economics. For example, in June, we’ll bring it to the G7 meetings in Canada. In November, we’ll bring it to the G20 meetings in South Africa and the COP30 meetings in Brazil. These international meetings can feel removed from the concerns of average people and grassroots communities. Our petition will show global leaders that you and your community want action on economic and ecological debt!” (Caritas Internationalis).

About fifty civil society and faith-based organisations worldwide are supporting the petition and the campaign Turn Debt into Hope. There is none, however, from Oceania. Caritas Papua New Guinea has recently raised this concern with a debate now ongoing on initiatives to be taken across the region in the coming months.

A global “Relay of Light”, a continuous 24-hour wave of action across the globe, starting in Samoa and finishing on adjacent American Samoa 24-hours later, in the middle of the Pacific, will take place on 24th May, the 10th anniversary of Laudato Si’, the encyclical letter of Pope Francis on the “care of our common home”.

Fiji, Papua New Guinea and Samoa are countries in the Pacific which already risk to experience the worst consequences of domestic and external debt. The Caritas Internationalis campaign should sound the alarm and convince everybody to be vigilant on what the political elites may do to either avoid the bad circumstances of rising debt burdens, or to cause it. (26 March 2025)