NEW YORK – In September 2020 Pope Francis reiterated to the United Nations his long-standing plea for changes to the global economic system, saying that “in the light of the present circumstances… all nations be enabled to meet the greatest needs of the moment through the reduction, if not the forgiveness, of the debt burdening the balance sheets of the poorest nations.”

At the time, Pope Francis was speaking to the impact of the COVID-19 pandemic. His calls for reform of the financial system echo Pope Benedict XVI, Pope John Paul II, and much of the global Church for decades.

With the Russian invasion of Ukraine, one global finance expert says the challenges Ukraine faces and will face in the weeks and months to come is the latest example of why these changes need to be made.

“In order for Ukraine to get through the current crisis in terms of recovery and its economy, it’s essential they have access to resources. One of those resources is being able to have debt relieved and restructured, in addition to whatever kind of other aid they could get,” Eric LeCompte, the executive director of Jubilee USA Network, told Crux.

Jubilee USA Network is a coalition of religious, development and advocacy groups that focuses on policies that help end poverty worldwide. The organization and LeCompte regularly work with the Vatican and the United States Conference of Catholic Bishops in advocating for changes to global economic and climate policy.

Ukraine’s total debt is about $94.5 billion, according to the International Monetary Fund. LeCompte said that as Ukraine faces the crisis of the Russian invasion, there are important steps the IMF, World Bank, and United States can take to alleviate some of its economic challenges.

Ukraine’s debt to the IMF is about $13.4 billion, more than $2 billion of which has to be paid this year unless it’s restructured.

“That’s a particular action the IMF has to look at now, and it would send a strong political signal in support of Ukraine if they were to restructure and move those debt payments to the future,” LeCompte said. “Even if they don’t act now, it’s very likely it’ll be something they have to do [eventually], because Ukraine isn’t going to have the money to pay that debt.”

The leaders of the IMF and World Bank signaled support for Ukraine in a joint statement on March 1, saying, “Our institutions are working together to support Ukraine on the financing and policy fronts and are urgently increasing that support.”

The statement doesn’t mention restructuring Ukraine’s debt. In a statement to Crux on March 4, a spokesperson for the IMF reiterated the organization’s commitment to supporting Ukraine but highlighted that under the IMF charter, it’s “not permitted to cancel claims or write off debt,” and instead said the organization’s ability to provide debt service “is based on the availability of third parties’ grants for the repayment of those loans.”

The IMF is, however, responding to Ukraine’s request for emergency financing through its Rapid Financing Instrument, which its board could consider as early as this upcoming week, according to the March 1 statement. The World Bank, meanwhile, is preparing a $3 billion package of support in the coming months, the statement said. The World Bank has also stopped all of its programs in Russia and Belarus because of the invasion of Ukraine.

Experts say there are two things the U.S. government can do in alleviating some of Ukraine’s financial pressure. The first has to do with $28 billion owed to bondholders and commercial creditors, since US President Joe Biden could sign an executive order deferring any private creditor debt payments with creditors registered in the U.S. President George W. Bush did the same thing the early 2000’s for Iraq’s private and oil debt.

Ukraine’s debt to the U.S. totals about $790 million, of which $2 million is due this year. Like the IMF, the US Congress could vote to restructure, or defer, those payments, or the Treasury Department could act on its own.

“That again, would send a strong signal of support for Ukraine,” LeCompte said.

Of the numerous, tough sanctions that the U.S. and world have placed on Russia in recent weeks, LeCompte said that “in the short term it’s something good to put pressure, but we also need to recognize that in some ways they’re kind of blunt instruments.” He added that the way the global system is set up will ultimately limit the amount of resources Ukraine receives.

“It’s unfortunate that we lack the tools and the financial system to really be able to support countries in crisis because all of the actions that we can take, which are important, are piecemeal, and without some kind of adequate bankruptcy and aid process we’re not going to be able to deliver the full amount of resources Ukraine needs,” LeCompte said.

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