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PPPs lead to dangerous debts for developing countries — it’s time for the World Bank to act

Maria Romero, Mathieu Vervynckt

01 Mar 2017 16:26:56

This blog was originally published on Devex. For many years, public-private partnerships have been promoted by governments and financial institutions as a way to pay for development projects such as roads, schools and hospitals. The World Bank is at the forefront of this push and advises governments on how to structure their PPPs. But it also ignores civil society campaigners’ concerns about the dangerous hidden debts that PPP projects can lead to. The European Network on Debt and Development, and more than 75 nongovernmental organizations and trade unions from all over the world, will not participate in the World Bank’s public consultations on PPPs until this dangerous problem is tackled. What are PPPs? PPPs are agreements in which the private sector essentially replaces governments ...

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Three changes the OECD needs to make to guard the poorest in new aid rules

Jeroen Kwakkenbos, Jesse Griffiths

20 Feb 2017 12:56:01

Originally published by Devex It has been a busy couple of years for the OECD’s Development Assistance Committee, the body in charge of determining what can and cannot be counted as “aid” to poor countries, or official development assistance. Major changes to aid have already been made during a year-long process of modernization of the ODA rules, but the biggest change in decades is yet to come. This March, the DAC will decide on how to include what are known as private sector instruments in aid. This could mean a dramatic increase in the use of aid to invest in or give loans to private companies, or to agree to bail out failed private sector projects through guarantees. Without strong safeguards and transparency standards there is a real risk that aid could be used as a backdoor subsidy ...

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Money has been flowing out of developing countries for over a decade: UN report

Jesse Griffiths

09 Feb 2017 11:26:34

Here is the dramatic graph from the United Nation’s annual stocktake of the world economy – the World Economic Situation and Prospects (WESP) report. After crunching all the numbers, the UN’s top finance experts calculate that, in net terms (finance inflows minus finance outflows), developing countries as a whole have been exporting money to the developed world at least since 2004. Of course, as the graph above shows, there are variations among countries, and regions – notably East and South East Asia, but this is a pretty dramatic conclusion – though not out of line with Eurodad’s own number crunching a couple of years ago.  How do they make this calculation? The first important point is that they are only counting what they call ‘financial flows’, which excludes ODA ...

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Information exchange needs to go beyond tax

Eurodad

26 Jan 2017 14:16:42

This blog was originally published by Tax Justice Network How to improve the Automatic Exchange of Information Automatic exchange of information (AEOI) is one of the hottest topics in the fight against tax evasion. The idea is that tax authorities will automatically exchange information about tax payers with financial assets in their jurisdictions. So, if someone from Spain has a bank account in the Cayman Islands, the Cayman Island authorities will, if many conditions are met, automatically inform the Spanish tax authorities.  We have generally welcomed this development, but we have also warned about many loopholes, especially those which prevent access to information by developing countries. For this reason, TJN sent a survey to more than 100 jurisdictions asking their views about how ...

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Nine United Nations principles that can help Greece and the Eurozone in 2017

Tiago Stichelmans

12 Jan 2017 10:57:29

Last December’s clash between the finance ministers of the Eurozone (the Eurogroup) and Greece shows how far we are from a long-term and sustainable solution to Greece’s debt issues. On 5 December, the Eurogroup endorsed proposals presented by the European Stability Mechanism (ESM) that will lead to symbolic debt relief and might represent up to a 20% debt reduction by 2060, according to the ESM. European governments did not take any further steps, however, as they remain divided on the future of Greece’s programme and most notably on the 3.5% fiscal surplus target after 2018. Even the International Monetary Fund (IMF), an organisation that can hardly be considered a radical leftist group, felt the need to clarify that it is not calling for more austerity for Greece and that the 3.5% ...

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Panama Papers amnesia causing headaches in EU: Member states reluctant to end secretive ownership

Jasper De Meyer

19 Dec 2016 17:50:07

This blog piece was jointly written with the Financial Transparency Coalition It was just nine months ago that countless business leaders, politicians and celebrities found themselves answering awkward questions about why their names appeared in leaked documents from Mossack Fonseca, a company known for setting up offshore business structures.  The leaks, which became known as the Panama Papers, gave a firsthand look at the murky world of offshore corporate structures, and the companies that help set them up. The investigation would be the catalyst for countless government probes, and even helped topple a government.  Perhaps most central and alarming about the revelations was the ease with which someone could open a company or trust and do so anonymously. ...

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Mozambique: future target of vulture funds?

Tiago Stichelmans

25 Nov 2016 12:10:15

Once considered an economic recovery miracle, Mozambique is now facing a debt crisis that puts its future in jeopardy. Restructuring its debt in the absence of an international sovereign debt restructuring mechanism will be tricky and vulture funds might use that opportunity to attack the country.  Is the Mozambican economic miracle over? In recent years, many saw Mozambique’s success story with great optimism. Despite the very low human development index of this former Portuguese colony, Mozambique’s economic potential was widely recognised. As with many emerging African economies, the important natural resources of Mozambique suddenly created a surge in investments and exports. In addition to its huge coal reserves, massive gas fields were discovered in the Indian Ocean waters bordering ...

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Complex structures and aggressive tax planning behind the Nicaragua Canal

Hernán Cortés Saenz

18 Nov 2016 13:04:05

A study – available only in Spanish – titled “Aggressive Tax Planning or Option Economy?: the case of the Hong Kong Nicaragua Canal Development Group,” analyses the ‘international tax rationale’ behind this megaproject that involves the creation of a structure with 16 companies located in jurisdictions such as Hong Kong, the Netherlands and the Cayman Islands. The conclusion is that the use of this multi-layered-structure seeks to avoid taxes. After being put on hold for decades, in 2013 the Nicaraguan government approved the Law 840 that awarded the licence for the construction of the canal, a free trade zone, two harbours and an airport to the Hong Kong Nicaragua Canal Development Investment Co. Limited – linked to the Cayman Island based group HKND Group.  The Law 840, ...

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Eurodad reaction to Council Conclusions on EU tax haven blacklist

Tove Ryding, Julia Ravenscroft

08 Nov 2016 18:18:38

Tuesday November 8 2016 Today, EU Member States discussed the creation of a tax haven blacklist during the Economic and Financial Affairs Council meeting in Brussels. Tove Maria Ryding, Tax Justice Coordinator at the European Network on Debt and Development (Eurodad), said: "The process for blacklisting countries remains highly political. The first thing the EU decided was that no EU countries can ever get blacklisted, despite the fact that several EU Member States are currently acting as tax havens. In the previous blacklist, 'EU friends', such as Switzerland and the United States, were also protected from blacklisting. This kind of double standard will not solve the problem, since tax dodging will just move from one tax haven to another. Furthermore, the EU won't gain much credibility ...

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Three principles for aid and the private sector

Jesse Griffiths

17 Oct 2016 16:32:59

Originally published by Public Finance International Using aid to mobilise trillions in private money is a hot and hugely controversial topic. Such aid is no different from any other kind: it can be well spent or badly spent and should meet basic effectiveness principles Donor governments are currently revising rules on Official Development Assistance (ODA or ‘aid’) so that the opportunities for using aid to leverage – or more accurately, subsidise – private companies and private investment could explode. This is, of course, hugely controversial, and Eurodad has warned that more care, thought and time should be devoted to such rule changes, involve recipients and stakeholders and be preceded by a firm commitment from donors not to tie aid to the use of their own firms. When we talk ...