How a plan to end poor countries’ debt crises created a new one
1 year ago

How a plan to end poor countries’ debt crises created a new one

Live Mint  

A plan to prevent another developing-country debt crisis is now at the root of the latest financial troubles destabilizing economies from Ghana to Sri Lanka and Pakistan. In Pakistan, interest payments on local-currency debt are expected to eat up more than half the government’s revenue this year, seven times what it will spend on its dollar debt. In a series of papers, they showed how international investors, focused on take-home profits in hard currency, were quicker to dump local-currency debt than dollar bonds when the Federal Reserve increased interest rates or the dollar increased in value. Indermit Gill, the World Bank’s chief economist, said he is pushing for an overhaul of the IMF and World Bank’s debt-sustainability framework for low-income countries to give more weight to local-currency debts. “If you’re going to issue domestic debt and pay a ridiculous interest rate, it is just going to bite back."

International China Sri Lanka Debt Domestic Interest Rates Ghana Interest World Bank Egypt Central Banks Countries End Banks Imf Dollar Bonds Governments Ghanaian Mensah Interest Payments Domestic Debt  domestic  dollar  end  crises  governments  poor  banks  localcurrency  bonds  plan  debt  international  countries  interest  created

History of this topic

How Trump, Starmer and Macron can avoid a debt crunch
4 weeks, 1 day ago

How Trump, Starmer and Macron can avoid a debt crunch

Live Mint  

America’s gross national debt is $36trn, or $107,000 per person. In rich countries, government bonds are as close as they can get to a “risk free" asset, making them less likely than foreign ones to stage a “buyers’ strike". Although it might seem that rich countries would balk at such measures, a paper in 2015 by Ms Reinhart found that …

Why the G-20 ‘Common Framework’ for Debt Relief Isn’t Helping Poor Nations
8 months, 2 weeks ago

Why the G-20 ‘Common Framework’ for Debt Relief Isn’t Helping Poor Nations

Bloomberg  

More than half of the world’s low-income countries are at high risk of debt distress or are already in it, and several have defaulted. But despite the world’s 20 largest economies having agreed in 2020 to a plan called the Common Framework to smooth the process of restructuring loans that governments could no longer afford to service or repay, progress …

IMF confirms increasing Egypt’s bailout loan to $8 billion
8 months, 3 weeks ago

IMF confirms increasing Egypt’s bailout loan to $8 billion

Associated Press  

CAIRO — The executive board of the International Monetary Fund confirmed a deal with Egypt to increase its bailout loan from $3 billion to $8 billion, in a move that is meant to shore up the Arab country’s economy which is hit by a staggering shortage of foreign currency and soaring inflation. The disruptions in the Red Sea are also …

Analysis: Egypt faces external debt reckoning after borrowing spree
1 year, 6 months ago

Analysis: Egypt faces external debt reckoning after borrowing spree

Firstpost  

The government says it will meet repayments, but it has not delivered on long-promised structural changes to its economy and its bid to raise cash by selling state holdings has failed to offload any major assets for foreign currency for nearly a year. Egypt faces an increasingly tough task raising cash for foreign debt repayments after external borrowing quadrupled over …

Egyptian pound has lost half of its value since March
1 year, 11 months ago

Egyptian pound has lost half of its value since March

Al Jazeera  

The currency depreciated by more than 13 percent as the central bank introduces flexible exchange rate. Egypt’s pound weakened by more than 13 percent to a new low below 32 to the US dollar on Wednesday, losing its value by half since March as the central bank moved to a more flexible exchange rate under the terms of an International …

Poor countries feel sting of local-currency debt
2 years ago

Poor countries feel sting of local-currency debt

Live Mint  

Some of the world’s poorest economies embraced borrowing in their own currencies as a shield from painful swings in the US dollar. Debt issued by emerging-market governments and companies in their local currency reached $12.5 trillion in 2021, according to data from Bank of America that excludes China’s enormous borrowings in the yuan. The country’s finance minister said last month …

IMF, World Bank chiefs warn of debt squeeze in poor nations
2 years, 8 months ago

IMF, World Bank chiefs warn of debt squeeze in poor nations

Associated Press  

WASHINGTON — The heads of the International Monetary Fund and the World Bank warned Wednesday that rising interest rates are squeezing the world’s poorest countries as they struggle with the coronavirus and soaring food prices. There is “a huge buildup of debt, especially in the poorest countries,’' World Bank President David Malpass said in a press conference. “As interest rates …

Discover Related