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...Category Archives: International Monetary Fund (IMF)
Credit Suisse fined £350m over Mozambique ‘tuna bonds’ loan scandal
Bank also pleads guilty to wire fraud and forgives hundred of millions of dollars of debt owed by country
Credit Suisse has been fined nearly £350m by global regulators, pleaded guilty to wire fraud, and agreed to forgive hundreds of millions of dollars worth of debt owed by Mozambique in an attempt to draw a line under the long-running “tuna bonds” loan scandal.
The Swiss banking company had been accused of “serious” failings in its financial crime controls by the UK’s Financial Conduct Authority (FCA), and has entered into a deferred prosecution agreement with the US Department of Justice that will put the bank under heavy monitoring for three years after having “defrauded US and international investors”.
Continue reading...Covid pandemic has pushed poor countries to record debt levels – World Bank
‘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...Rishi Sunak to save billions by counting IMF cash as aid for poor
Exclusive: chancellor criticised by former Tory international development secretaries for planned use of $27.4bn windfall
Rishi Sunak is to save billions of pounds by counting as aid financial assistance to poor countries being provided as a result of a windfall Britain has received from the International Monetary Fund (IMF).
In a move that has been condemned by former Conservative international development secretaries, the chancellor has chosen not to use the UK’s share of a new $650bn IMF global fighting fund to increase the share of national output spent on aid.
Continue reading...IMF to issue downbeat outlook as spectre of stagflation looms
Fund set for a gloomy annual meeting as supply chain issues and inflationary pressures hobble global recovery
Weaker global growth, vaccine protectionism and the spectre of 1970s-style inflation haunting large economies. As the International Monetary Fund prepares for its annual gathering this week, the contrast with the spring could not be more stark.
Back in April, at the Washington-based fund’s last virtual bash, there were sharp upgrades for global growth amid a sense of optimism for the road ahead, led by stronger-than-expected recoveries in the US, UK and other advanced economies. Vaccines would pave the way for the swift unlocking of pandemic restrictions, fuelling a rapid recovery from the worst global recession since the 1930s Great Depression.
Continue reading...IMF boss Kristalina Georgieva ‘faces coup plot’
Renowned economist Joseph Stiglitz says chief is victim of conservative ‘hatchet job’ using unfair report to discredit her
The International Monetary Fund boss, Kristalina Georgieva, is the victim of a plot to oust her, according to a Nobel prize-winning economist, after a report alleged that she applied “undue pressure” on staff to boost China’s standing in global rankings while in her previous job at the World Bank.
Joseph Stiglitz, a former chief economist at the World Bank, said a report prepared by the law firm WilmerHale on concerns about China’s influence at the Washington-based organisation was being used unfairly to “discredit and oust” Georgieva.
Continue reading...More than 100 countries face spending cuts as Covid worsens debt crisis, report warns
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 Taliban are not the only threat to Afghanistan. Aid cuts could undo 20 years of progress
The most vulnerable people will bear the cost of sanctions, as services and the economy collapse
Watching Afghanistan’s unfolding trauma, I’ve thought a lot about Mumtaz Ahmed, a young teacher I met a few years ago. Her family fled Kabul during Taliban rule in the late 1990s.
Raised as a refugee in Pakistan, Ahmed had defied the odds and made it to university. Now, she was back in Afghanistan teaching maths in a rural girls’ school. “I came back because I believe in education and I love my country,” she told me. “These girls have a right to learn – without education, Afghanistan has no future.”
Continue reading...Covid and the crisis of neoliberalism | Adam Tooze
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”.
Continue reading...The Guardian view on global vaccine inequality: unwise as well as unethical | Editorial
Richer countries must wake up and see the bigger Covid picture
The statistics are stark and shaming. During an exasperated intervention earlier this week, the World Health Organization’s director general, Tedros Adhanom Ghebreyesus, pointed out that of 4.8bn Covid vaccine doses delivered around the world to date, around 75% have gone to just 10 countries. The level of vaccine donations from richer countries, he added with some understatement, has been “really disappointing”. In Africa, where a third wave of the virus has been on the march since May, less than 2% of the continent’s population has received a first dose. While high-income countries across the globe have administered around 100 doses for every 100 citizens, the equivalent figure for low-income countries is 1.5.
As a consequence, while the United States, Britain and other richer nations begin to roll out programmes for booster shots in the autumn, a pandemic of the unvaccinated continues unabated elsewhere. The WHO’s target of reaching 10% of the population of every country with a first shot by the end of September is unlikely to be met. This grotesque inequity, as Mr Ghebreyesus and others have repeatedly pointed out, is ultimately in no one’s interest. Allowing much of the planet to operate as a variant factory, and the more transmissible Delta variant to run riot, stores up trouble for the future. “Vaccinating the world” should therefore be seen as sound strategy as well as an ethical obligation. But, in Europe and North America, early good intentions have so far come a distant second to domestic priorities.
Continue reading...If education is such a great investment, it deserves serious international backing
The World Bank and IMF should step in to finance a recovery of children’s learning chances devastated by the pandemic
“Education,” wrote Nelson Mandela, “is the most powerful weapon you can use to change the world.” One wonders what he would have made of the response to the education crisis triggered by the Covid-19 pandemic. A crisis threatening to derail social and economic progress, trapping millions of children in poverty. The UN secretary general has warned of a “generational catastrophe”, yet the international response has been marked by staggering complacency.
That lack of concern was on public display at last week’s Global Education Summit in London. Fresh from cutting UK aid to education by 40%, Boris Johnson – a self-styled champion for universal girls’ education – opened proceedings by declaring that education was “the single best investment we can make in the future of humanity”.
Continue reading...Failure to help poor countries fight Covid ‘could cost global economy $4.5tn’, says IMF
Fund calls on rich nations to help halt spread of infectious variants through countries with low vaccination rates
The world economy risks losing $4.5tn (£3.3tn) from highly infectious variants of Covid-19 spreading through poor countries where vaccination rates are lower, the International Monetary Fund has warned.
Calling on rich countries to take urgent action to share at least 1bn doses with developing nations, or risk severe economic consequences, the Washington-based fund said the gap between rich and poor economies had widened during the pandemic and risked worsening further next year.
Continue reading...Guns, gangs and ‘bad aid’: Haiti’s crisis reaches full throttle
Incessant foreign meddling and corrupt elites have ensured life for Haitians remains mired in violence and poverty. President Moïse’s assassination marks an escalating catastrophe
The Haitian political activist Marie Antoinette Duclair appears to have been unaware that two men on a motorbike were following her car through the badly lit streets of Port-au-Prince.
Her passenger on the night of 29 June was a journalist, Diego Charles. They had been attending a meeting, and she was now, at 11 o’clock at night, dropping him at his home in the Christ-Roi area of Haiti’s capital.
Continue reading...Protesters call on banks to ‘drop African debt’ in wake of Covid
World’s poorest nations saddled with ‘imprisoning’ debt, hampering responses to the pandemic, say activists protesting HSBC meeting
Activists at a demonstration outside the annual general meeting of HSBC in London have demanded the bank and other financial giants provide debt relief to African countries hit hard by the coronavirus pandemic.
In an attempt to highlight the role of private creditors in the debt crises of the world’s poorest countries, campaigners with “drop the debt” banners gathered outside HSBC’s AGM at the Southbank Centre.
Continue reading...G20 takes step towards global minimum corporate tax rate
Meetings of finance ministers follow change in US stance, with consensus growing on tackling tax avoidance
G20 finance ministers are exploring a global minimum tax on corporate profits, amid growing international consensus on tackling avoidance after the pandemic.
The virtual meetings between the group of 20 major industrial nations come after the US made the case for an international base rate this week, in a move by the Biden administration to end US resistance to international tax reforms.
Continue reading...Four-fifths of Sudan’s £861m debt to UK is interest
Freedom of information data will increase calls for country to be granted debt amnesty
When Dominic Raab, the foreign secretary, was in Sudan in January he offered £40m in aid to help its poorest people, who are facing unprecedented food scarcity in a debt-laden country where austerity is deepening.
Sudan, ruled by an unelected military-led transitional government after longtime ruler Omar al-Bashir was deposed in 2019, owes the UK almost £900m. But the Observer can reveal that almost 80% of that was accrued from interest, leading to calls for an unconditional debt amnesty.
Continue reading...Keep Covid rescue programmes or risk triggering stock market crash, warns IMF
International Monetary Fund says there are concerns about share price bubble
Governments and central banks must maintain their pandemic rescue programmes or risk triggering a stock market crash, the International Monetary Fund has said.
Warning that there were legitimate concerns about a share price bubble, the Washington-based organisation said that without continued low interest rates and government subsidies it was possible a “correction” in stock markets would occur.
Continue reading...Zambia’s default fuels fears of African ‘debt tsunami’ as Covid impact bites
Aid agencies say debts should be restructured or cancelled due to the pandemic and warn other countries could follow
Zambia has become the first African country to default on its debts since the pandemic, leading to fears that a “debt tsunami” could engulf the continent’s most heavily indebted nations as the financial impact of coronavirus hits.
A hastily-arranged G20 finance minister meeting in Saudi Arabia failed to sort out Zambia’s debt, after the southern African country missed a $42.5m (£32m) coupon payment on its bonds in October. Missing another payment on 14 November meant a technical default.
Continue reading...IMF estimates global Covid cost at $28tn in lost output
World economic outlook says 2020 impact is less than thought but there will be deep scars
The International Monetary Fund has scaled back its estimate of the hit to the global economy from Covid-19 this year but warned that the final bill for the pandemic would total $28tn (£21.5tn) in lost output.
Gita Gopinath, the IMF’s economic counsellor, described coronavirus as the worst crisis since the Great Depression, and said the pandemic would leave deep and enduring scars caused by job losses, weaker investment and children being deprived of education.
Continue reading...Creditors must wake up fast to threat of emerging market debt crisis
Zambia could become the first country to default on its debts amid the fallout from Covid-19, but it won’t be the last
Zambia is running out of money to pay its debts. It has asked bondholders for breathing space so that it can put a restructuring plan in place. The copper-rich African state is at risk of being the first country to default on its debts since the start of the coronavirus pandemic.
Not the last though. Zambia is the canary in the coalmine, a harbinger of a full-blown crisis that has been lurking in the background from the moment the seriousness of Covid-19 became apparent.
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