Custom Search 1

New figures show increased world debt crisis

TWENTY-SEVEN countries across the world are in debt crisis, with a further 80 at risk of being so, according to new figures released for World Debt Day today.

The figures, calculated by the Jubilee Debt Campaign, classify countries as in debt crisis if they have a large financial imbalance with the rest of the world and large government payments on external debt, as a proportion of revenue.

According to this analysis, 27 countries are currently in debt crisis, up from 22 when the figures were last calculated in 2015. The 27 countries include:

· Impoverished countries which have been hit by the fall in global commodity prices, including Ghana, the People's Democratic Republic of Lao, Mongolia and Mozambique;

· Eurozone countries such as Greece, Ireland and Portugal; and

· Countries in the global south which have been in debt crisis for many years, having never qualified for previous debt relief schemes, including Jamaica, Pakistan, Sri Lanka and Tunisia.

SUNNY SIDE OF THE STREET: International Monetary Fund (IMF) head Christine Lagarde visiting London's treasury in 2016

Tim Jones, economist at the Jubilee Debt Campaign, said:

“Too many countries labour under the servicing of unsustainable debts, at a cost to public services and meeting basic human needs. Rather than resolving these crises, institutions like the International Monetary Fund (IMF) perpetuate them by lending more money to countries in crisis, bailing out reckless lenders, whilst people suffer. This has to end, and lenders need to be required to reduce the debt.”

Jubilee Debt Campaign has also analysed the degree to which other countries are at risk of either a public or private sector debt crisis, based on them having a significant financial imbalance with the rest of the world, and either a significant government debt or debt payments, or significant private sector debt, compared to the country or government’s capacity to repay.

Under these measures, 22 countries are at risk of a public or private debt crisis, a further 17 at risk of a public debt crisis, and 40 a private debt crisis. In total this is 79 countries, up from 71 when the figures were last calculated in 2015. The 2015 evaluation concluded that Bhutan, Ghana, Lao PDR, Mongolia and Mozambique were countries at high risk of debt crisis, which have now moved into the ‘in debt crisis’ category.

In 2015 Jubilee Debt Campaign spotted the high risk in Mozambique which was missed by the IMF, who evaluated the country as at moderate risk in 2015.

Countries at risk of a private sector debt crisis include Australia, the UK and US, and those at risk of a public sector debt crisis include Cameroon, Ethiopia and Zambia.

Jones continued:

“The world is woefully underprepared for a new round of debt crises, both because of the failure to create a fair and transparent debt restructuring process for government debts, and the lack of action to strengthen regulation of bank lending and controls on cross-border movements of money. As US dollar interest rates increase, the threat of crises will escalate.”

For more information on countries in crisis, click here.

Read every story in our hardcopy newspaper for free by downloading the app.

Facebook Comments