Commitment by Mogadishu’s largest single lender is latest in series of deals to forgive ‘unsustainable’ $4.5bn debt
Somalia has announced that more than $1.1bn (£860m) of outstanding loans will be cancelled by the US, a sum representing about a quarter of the country’s remaining debt.
The announcement is the latest in a series of agreements in which Somalia’s creditors have committed to forgiving its debt obligations.
Continue reading...Kyiv shouldn’t have to fight ‘shameless bondholders’ as repayment deadline nears, say campaigners
Campaigners are urging Britain’s new Labour government to prevent Ukraine being sued in the UK courts if the country defaults on its debts to private creditors.
Debt Justice said a two-year suspension of Ukraine’s debt payments was scheduled to expire on 1 August, and that action was needed to protect Kyiv from the possibility of legal action from its creditors.
Continue reading...When everyday Australians go to the wall, private debt collectors step in. In a cost-of-living crisis it’s vital to scrutinise the industry
More than half of all Australians have recently found themselves in some form of financial stress. Increasing numbers of people are facing energy poverty, food insecurity, delayed medical treatment and housing insecurity.
Calls to the National Debt Helpline have increased by 25% in the last financial year. When everyday Australians go to the wall, there is one sector that gets more business: the private debt collection industry.
Panthera Finance, Australia’s biggest privately owned debt collection business, has ignored a five-year “blacklisting” from the Victorian regulator and continued to purchase debts despite being warned that continuing to purchase and collect debts would be a criminal offence. The regulator has so far taken no action.
A former debt collector with 15 years’ experience in the industry says that some of the conduct he was involved in would “horrify” the general public. He claims he once issued a threat to seize the home of a rape victim whose husband had just died, and in another case dispatched an agent to a child’s school in a last-ditch effort to find a debtor.
Community legal services report debt collectors making false and misleading threats about a person’s credit rating to get them to pay and using underhanded tactics in order to extend the usual six-year time limit on collecting debts.
The Australian Financial Complaints Authority (Afca) says it has heard complaints of intimidating communication and of debt collection continuing while the authority is investigating, which is not permitted.
Afca also says complaints about debt collectors and buyers increased 9% last year, although specific complaints about inappropriate debt collection practices went down.
The industry peak body disputes the rise in complaints – it says its own data analysis shows steady reductions year-on-year since 2020, although this data does not include complaints that are resolved in their early stages prior to Afca involvement. The peak body claims less than 1% of complaints are substantiated to show any fault by the debt collector.
Continue reading...Poverty reduction drive all but halted across many nations as Bank calls for more money to tackle a ‘great reversal’
The devastating impact of the pandemic on the world’s poorest countries has brought poverty reduction to a halt and led to a widening income gap with nations in the rich west, the World Bank has warned.
In a report released to coincide with its half-yearly meeting, the Washington-based organisation said half of the world’s 75 poorest nations had seen income per head rise more slowly than in developed countries over the past five years.
Continue reading...Paris Club of creditor nations agree cancellation as Mogadishu moves towards financial normalisation amid ongoing conflict
The Paris Club, a collection of some of the world’s wealthiest creditor nations, has announced the cancellation of 99% of Somalia’s debt, in a major boost as the country continues its fragile economic recovery from an ongoing three-decade conflict.
In a statement released by the Paris Club, which is run by senior officials from the French Treasury, Somalia’s creditors, including the US, UK, Russia, Norway, and Japan, announced the cancellation of $2bn owed to club members as of January 2023.
Continue reading...Beijing must be more ready to support countries facing distress, says deputy chief economist
China holds the key to speeding up debt relief and ending the “silent crisis” that is holding back attempts to tackle poverty in the world’s poorest countries, a senior World Bank official has said.
Ayhan Kose, the Bank’s deputy chief economist, said Beijing needed to be more active in negotiations to provide financial support for those countries already in, or close to, debt distress.
Continue reading...Cop28 hears poorest nations spend at least 12 times as much to service debts than on tackling global heating
The fight against the climate emergency is being hampered by a debt crisis that involves the world’s poorest countries paying more than 12 times as much to their creditors as they are spending on measures to tackle the impact of global heating, a campaign group has warned.
As the Cop28 meeting opened in the United Arab Emirates, Development Finance International (DFI) said a new round of comprehensive and deep debt cancellation was needed to free up much-needed investment in climate emergency adaptation.
Continue reading...Countries in debt distress thrown financial lifeline but critics say measures fall short of what is needed
Poorer countries struggling with a growing debt crisis were thrown a lifeline at a global finance summit in Paris but the plans still fell short of the debt forgiveness programme that some had hoped for.
Progress was made on reforms that would help address the climate emergency, as nearly 40 world leaders and the heads of global institutions met in Paris for the summit, which ended on Friday.
Continue reading...Package similar to 2005 deal needed as struggling African countries suffer severe funding squeeze, says official
Western countries need to put together a debt relief and aid package to match that of the landmark Gleneagles summit deal in 2005 in order to counter a severe funding squeeze affecting struggling African countries, the International Monetary Fund has said.
Abebe Selassie, the director of the IMF’s African department, said without a scaling up of financial support some of the world’s poorest countries would have no chance of meeting the 2030 UN goals for poverty reduction.
Continue reading...Exclusive: 182 experts say only debt cancellation offers chance of recovery but private investors are playing hardball
Some of the world’s most powerful hedge funds and other investors are holding up vital help for crisis-hit Sri Lanka by their hardline stance in debt-relief negotiations after the Asian country’s $51bn (£42bn) default last year, according to 182 economists and development experts from around the world.
In a statement released to the Guardian on Sunday, the group said extensive debt cancellation was needed to give the economy a chance of recovery and that Sri Lanka would be a test case of the willingness of the international community to tackle a looming global debt crisis.
Continue reading...Economists accuse bondholders of standing to make huge profits at the expense of the crisis-hit country
More than 100 economists and academics have urged international lenders to crisis-stricken Zambia to write off a significant slice of their loans during financial restructuring talks this month.
Zambia is seeking up to $8.4bn (£7.3bn) in debt relief from major lenders, including private funds run by the world’s largest investment manager, BlackRock, to help put its public finances back in order.
Continue reading...Years of mismanagement have led to soaring debt levels, but critics say that without meaningful relief, austerity will continue
The International Monetary Fund has approved a $1.3bn (£1.1bn) loan to Zambia, as the country scrambles to rebuild its crisis-hit economy after defaulting on its foreign debts in 2020.
The Covid pandemic compounded Zambia’s economic woes, blamed on years of mismanagement and corruption, which left the country with unsustainable levels of debt.
Continue reading...Banks and traders have been ‘let off the hook’ by G7 despite being more to blame for the looming crisis than China
Western governments should “compel” private lenders to ease loan repayments from low-income countries to tackle a debt crisis, according to campaigners.
Debt Justice, formerly the Jubilee Debt Campaign, said African governments owe three times more debt to western banks, asset managers and oil traders than they do to China, and are charged double the interest. China has been “mistakenly” blamed by western leaders for the failure to make progress on debt restructuring.
Continue reading...The south Asian country is the first to buckle under economic pressures compounded by Russia’s war on Ukraine, but it won’t be the last
The departure of Sri Lanka’s prime minister, Mahinda Rajapaksa, follows weeks of protest and a deepening crisis. There is no bankruptcy system for states but if there was then the south Asian country – down to its last $50m (£40m) of reserves – would be first in line to use it.
A team from the International Monetary Fund (IMF) this week started work with officials in Colombo over a bailout that will include a tough package of reforms as well as financial support. But as the IMF and its sister organisation, the World Bank, know full well, this is about more than the mismanagement of an individual country. They fear Sri Lanka is the canary in the coalmine.
Continue reading...Charity calls for debt cancellations for poorest countries to counter ‘worst collapse into poverty and suffering in memory’
The rising price of food caused by Russia’s invasion of Ukraine and increased energy costs could push a quarter of a billion more people into extreme poverty, Oxfam has warned.
The charity said these new challenges had piled on to the economic crises created by Covid, and called for urgent international action, including cancelling debt repayments for poorer countries.
Continue reading...The belt and road initiative is ensnaring vulnerable countries in debt via corrupt infrastructure projects. Slavery reparations from former colonial powers could help turn the tide
As Transparency International (TI) publishes their annual Corruption Perceptions Index (CPI) this week, it will be interesting to see where certain countries land: 2021 has been a bumper year for corruption.
In Britain, corruption has been on the minds of journalists, academics and practitioners alike, as Boris Johnson tries to get himself run out, the only hope of him continuing his innings lying with Sue Gray.
Continue reading...The year 2020 exposed the risks and weaknesses of the market-driven global system like never before. It’s hard to avoid the sense that a turning point has been reached. By Adam Tooze
Continue reading...‘Tragic reversal’ has set back progress, president says, as he calls for a comprehensive plan
The Covid-19 pandemic has led to a “tragic reversal” in development and pushed debt in poor countries to record levels, the head of the World Bank has said.
David Malpass, the bank’s president, warned the virus had widened the gap between rich and poor nations, setting back progress by years and, in the case of some countries, by a decade.
Continue reading...As pandemic widens inequalities, many developing countries spend more on debt than health, study says
More than 100 countries face cuts to public spending on health, education and social protection as the Covid-19 pandemic compounds already high levels of debt, a new report says.
The International Monetary Fund believes that 35 to 40 countries are “debt distressed” – defined as when a country is experiencing difficulties in servicing its debt, such as when there are arrears or debt restructuring.
Continue reading...The year 2020 exposed the risks and weaknesses of the market-driven global system like never before. It’s hard to avoid the sense that a turning point has been reached
If one word could sum up the experience of 2020, it would be disbelief. Between Xi Jinping’s public acknowledgment of the coronavirus outbreak on 20 January 2020, and Joe Biden’s inauguration as the 46th president of the United States precisely a year later, the world was shaken by a disease that in the space of 12 months killed more than 2.2 million people and rendered tens of millions severely ill. Today the official death tolls stands at 4.51 million. The likely figure for excess deaths is more than twice that number. The virus disrupted the daily routine of virtually everyone on the planet, stopped much of public life, closed schools, separated families, interrupted travel and upended the world economy.
To contain the fallout, government support for households, businesses and markets took on dimensions not seen outside wartime. It was not just by far the sharpest economic recession experienced since the second world war, it was qualitatively unique. Never before had there been a collective decision, however haphazard and uneven, to shut large parts of the world’s economy down. It was, as the International Monetary Fund (IMF) put it, “a crisis like no other”.
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