Finance companies ‘may make $30bn’ by delaying debt relief for five countries

theguardian.com:

Some of the world’s biggest financial companies stand to profit by up to $30bn by resisting mounting pressure to provide debt relief for five heavily indebted countries, a campaign group has said.

Debt Justice said the hardline stance adopted by private-sector creditors was preventing progress on easing the financial burden of Ethiopia, Ghana, Sri Lanka, Suriname and Zambia that could help alleviate poverty.

Both the International Monetary Fund and the World Bank have been urging private creditors – the biggest being the US asset management company BlackRock – to help speed up debt relief under the common framework, set up by the G20 group of developed and developing countries in 2020.

So far only one country – Chad – has received debt relief through the common framework, which brings together multilateral creditors such as the World Bank with sovereign creditors such as China, and private investors. Ethiopia, Zambia and Ghana have applied for debt relief under the initiative.

Debt Justice said private creditors were holding out in order to maximise profits on their bond holdings and called on the government to legislate to ensure private creditor participation in debt relief. Just over half the bonds in private hands are governed by English law.

BlackRock said it had a strong history as a “responsible and constructive” participant in debt restructuring and had a shared interest in reaching a deal.

A spokesperson said: “BlackRock is a long-term investor in emerging market sovereigns on behalf of our clients. As a fiduciary, the money we invest on their behalf is not our own – it is predominantly the money of ordinary people saving for retirement, and we have to act in their best financial interests at all times. For that