Tag Archives | Debt

Jayati Ghosh warns against historically disastrous approaches to the sovereign-debt crisis hitting low- and middle-income countries.

As rich countries raise interest rates in double-edged efforts to address inflation, developing countries are struggling to cope with slowdowns, inflation, higher interest rates and other costs, plus growing debt distress.

Sri Lanka owes 81% of its external debt to US and European financial institutions and Western allies Japan and India. China owns just 10%. But Washington blames imaginary “Chinese debt traps” for the nation’s crisis, as it considers a 17th IMF structural adjustment program.

To calculate the true extent and burden of this debt, the KHN-NPR investigation draws on a nationwide poll conducted by KFF for this project. The poll was designed to capture not just bills patients couldn’t afford, but other borrowing used to pay for health care as well.

The material benefits of this pause to student loan payments are not something to be taken lightly. But considering the pause has clearly helped borrowers survive, the question for the Biden administration is simple: Why not make it permanent, and cancel all student debt?

Developing country governments are being wrongly advised to use their modest fiscal resources to pay down accumulated debt instead of strengthening pandemic relief and recovery. Thus, debt phobia risks deepening and extending COVID-19 recessions by prioritizing buybacks.

I admit upfront that this is a hard newsletter to read. It is about debt. There is a bloodless quality to the way that we talk about the debt of the poorer nations. There is nothing poetic here. The numbers are alienating, their outcome shocking.