G7 owes huge $13 trillion debt to Global South

Wealthy Group of Seven (G7) countries owe low- and middle-income countries $13.3 trillion in unpaid aid and funding for climate action, reveals new analysis from Oxfam ahead of the G7 Summit in Hiroshima, Japan. 

Despite failing to pay what they owe, G7 countries and their rich bankers are demanding that Global South countries pay $232 million a day in debt repayments through 2028. This money could otherwise be spent on healthcare, education, gender equality and social protection, as well as addressing the impacts of climate change.

“Wealthy G7 countries like to cast themselves as saviors but what they are is operating a deadly double standard —they play by one set of rules while their former colonies are forced to play by another. It’s do as I say, not as I do,” said Oxfam International interim Executive Director Amitabh Behar.

“It’s the rich world that owes the Global South. The aid they promised decades ago but never gave. The huge costs from climate damage caused by their reckless burning of fossil fuels. The immense wealth built on colonialism and slavery.”

“Each and every day, the Global South pays hundreds of millions of dollars to the G7 and their rich bankers. This has to stop. It’s time to call the G7’s hypocrisy for what it is: an attempt to dodge responsibility and maintain the neo-colonial status quo,” said Behar.

The G7 leaders are meeting at a moment where billions of workers face real-term pay cuts and impossible rises in the prices of basics like food. Global hunger has risen for a fifth consecutive year, while extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years.  

Despite a commitment last month from the G7 to phase-out fossil fuels faster, Germany is now pushing for G7 leaders to endorse public investment in gas. It has been estimated that the G7 owes low- and middle-income countries $8.7 trillion for the devastating losses and damages their excessive carbon emissions have caused, especially in the Global South. After 30 years of deadlock, rich countries agreed at COP26 to establish a loss and damage fund. But huge questions remain about how it will work. 

G7 governments are also collectively failing to meet a longstanding promise by rich countries to provide $100 billion per year from 2020 to 2025 to help poorer countries cope with climate change.

In 1970, rich countries agreed to provide 0.7 percent of their gross national income (GNI) in aid. Since then, G7 countries left unpaid a total of $4.49 trillion to the world’s poorest countries —more than half of what was promised. 

“This money could have been transformational,” said Behar. “It could have paid for children to go to school, hospitals and life-saving medicines, improving access to water, better roads, agriculture and food security, and so much more. The G7 must pay its due. This isn’t about benevolence or charity —it’s a moral obligation.”

258 million people across 58 countries are currently experiencing acute hunger, up 34 percent over the last year. In East Africa alone, drought and conflict have left a record 36 million people facing extreme hunger, nearly equivalent to the population of Canada. Oxfam estimates that up to two people are likely dying from hunger every minute in Ethiopia, Kenya Somalia and South Sudan.

The fortunes of the world’s 260 food billionaires have increased by $381 billion since 2020. Synthetic fertilizer corporations increased their profits by ten times on average in 2022. According to the IMF, the 48 countries most affected by the global food crisis face an additional $9 billion in import bills in 2022 and 2023. 

The G7 is home to 1,123 billionaires with a combined wealth of $6.5 trillion. Their wealth has grown in real terms by 45 percent over the past ten years. A wealth tax on the G7’s millionaires starting at just 2 percent, and 5 percent on billionaires, could generate $900 billion a year. This is money that could be used to help ordinary people in G7 countries and in the Global South who are facing rising prices and falling wages.

Oxfam is calling on G7 governments to immediately:
 

• Cancel debts of low- and middle-income countries that need it.
• Return to the 0.7 percent of GNI aid target, pay off aid arrears, and meet their commitment to provide $100 billion annually to help poorer countries cope with climate change.
• Bring in new taxes on rich individuals and corporations. 
• Expedite the reallocation of at least $100 billion of the existing Special Drawing Rights (SDR) issuance to low- and middle-income countries and commit to at least two new $650 billion issuances by 2030.