Find out the latest developments from countries around the world fighting against unjust and unpayable debt:
Brazil has in what is being referred to as a ‘gesture of solidarity’ projected the cancellation of $900 million in debt owed by twelve African countries including the Republic of Congo (owing $350 million), Tanzania ($237 million), and Zambia ($113 million). Others however are criticising this as being only an attempt to expand Brazil’s economic power internationally whilst questioning the suitability of some countries, namely Republic of Congo, Gabon, and Sudan which are facing legal action for cases of corruption.
Meanwhile, the IMF has highlighted the importance of fiscal discipline and more responsible spending in Brazil if it is to cut its own public debt.
Zimbabwe is hopeful that it will meet its IMF targets set as part of its supervised economic reform programme by the end of the year when performances are reviewed. Finance Minister Patrick Chinamasa claims the country has already met and exceeded some targets but is behind on others, although is confident that if some targets are not met it will not lead to a further IMF review. The government has also told the IMF it will submit a bill before parliament by the end of the month to take over the debt owed by the Reserve Bank of Zimbabwe (RBZ) and submit to cabinet amendments to the Precious Stones Trade Act to incorporate the principles stating that revenues from Marange diamonds flow into the Treasury (a June 2013 IMF deadline for this having already been missed).
The African Development Bank (AfDB) says the International Monetary Fund’s (IMF) supervised economic reform is indicative of the significant improvement in Zimbabwe’s cooperation on economic policies and its commitment to address its arrear problems.
Pakistan has paid off $393 million as part repayment of its bailout loan facility with the IMF, yet another loan in 29 years of bailouts. In accepting its new loan package of $6.6 billion it has already started facing the conditions attached to this. Petrol and other fuel prices have risen and the IMF is demanding all energy subsidies are removed alongside further increases to sales taxes. Such changes are expected to hit ordinary people the hardest and encourage inflation throughout the economy. There are also fears of another wave of privatisation including the national railway. The importance of the bailouts is in helping Pakistan meet the repayments demanded of it by its creditors and yet, in lending more money, the situation in Pakistan itself is not improved and the burden of debt persists. Concerns are mounting about the Government’s ability to ever retire the loans.
You can read more about Pakistan’s debt in Islamic Relief and Jubilee Debt Campaign’s July 2013 briefing ‘Unlocking the chains of debt’ http://issuu.com/dropthedebt/docs/unlocking_the_chains_of_debt_final_version_05.13
The IMF has published new research drawing on the experiences of Iceland and Ireland to suggest high debt levels are more dangerous for big governments than previously felt. The report warns against concentrating budget costs early on but also suggests that ‘excessive delay’ in implementing austerity measures may be costly.
The Seychelles has topped the list of the most indebted countries at 150% of GDP. It is followed on the list by four casualties of the Eurozone crisis: Portugal, Ireland, Greece and Spain. The UK is 98th on the list. Meanwhile, Singapore, Switzerland and Saudi Arabia emerge as the largest net creditors to the rest of the world.
Also listed are the countries where repaying government debts swallows up the largest proportion of revenues. Lebanon tops this list, with more than 55% of the money that comes into the treasury going straight back out to creditors. Jamaica, Greece and Ireland all spend more than 25% of revenues on servicing their national debt.
A new UN report has stated that the Millennium Development Goals have had successes in reducing poverty and seen the lives of millions across the world improve. It however claims that more must be done to increase aid and push for a multilateral trade agreement. On debt relief in particular it states that by April 2013 35 of 39 of the world’s poorest nations had reached the benchmark for getting debt relief but that many Caribbean nations are reaching a budgetary crisis with there being no debt-relief mechanisms in place for them. There are therefore concerns for the economic health of these countries and the possibility of future debt crises.
Grenada is set to sign an agreement with the IMF on measures aimed at dealing with their high debt levels (likely to be signed in October when more details on the exact terms and conditions of the agreement will come forward).
Nigeria’s Special Adviser to the UN Secretary General on Post-2015 Development Planning, Ms. Amina Mohammed, has said the total accrual of $1 billion annually from the debt relief savings granted to the federal government by the Paris Club from 2006 will not be enough to meet the attainment of the Millennium Development Goals and that greater attention must be paid to poverty reduction measures.
Zambia has a current debt to GDP ratio of 27% of the country’s $20 billion GDP. These current levels are believed to be sustainable and yet there are concerns particularly over a rising trend of taking on commercial loans, which stipulate fewer conditions than their concessional alternatives, but have higher interest rates. Equally, critics believe there is a lack of parliamentary oversight and wasted potential in the tax system leaving Zambia vulnerable to future debt crisis if it continues on a trend of increased borrowing.