At the start of the New Year, the number of countries at high risk of debt distress is growing at an alarming rate. With so many crises already ongoing, and more expected to emerge over the next 12 months, it’s no surprise that the topic is high on the agenda of international organisations. But perhaps it’s not as high up as it should be in order to head off a looming crisis…
First in a two-part blog series
When the global financial crisis broke, the world looked to the G20 to find solutions. But as G20 leaders recently gathered in Buenos Aires 10 years on for their 2018 Summit, it was all too clear that ‘too big to fail banks’ have grown even bigger while we’re stuck with a vastly expanded shadow banking industry and a very worrying new wave of debt crises. Even though the G20 consider themselves to be the world’s major body for economic policy coordination, they are sleepwalking into the next crisis.
“There are negotiations being made that are going to answer all of your questions and solve all of your problems. That’s all I can tell you right now.” So goes the line from The Godfather.
Debt problems continue to burden countries on both sides of the Atlantic. Argentina has just agreed the highest ever International Monetary Fund (IMF) loan and risk premiums for Italian bonds have surged. This is the backdrop for a new report by the Euro-Latin American Parliamentary Assembly (EuroLat – a forum that brings together 150 parliamentarians from the two regions). The report joins growing demands for better institutions to help prevent and resolve debt crises.
With the country still reeling from the devastation of the Sulawesi tsunami, Indonesia played host to the Annual Meetings of the International Monetary Fund (IMF) and World Bank Group (WBG), in Bali last week. The sobriety of the moment was reflected in gloomy forecasts from the IMF, which issued stark warnings of debt and trade risks to global growth. Meanwhile, controversy surrounded the World Bank’s new Human Capital Index; the 2019 World Development Report; and the ‘private finance first’ approach at the core of the Bank’s Maximising Finance for Development. CSOs and academics raised their voices to shine a light on the risks that the policies of the Bretton Woods Institutions (BWIs) posed to human rights and sustainable development across the Global South. Eurodad presented new research on the harmful impacts of Public-Private Partnerships and on IMF loan conditionality, and facilitated dialogue on better creditor coordination to solve debt crises.
The second session of the Intergovernmental Group of Experts on Financing for Development will focus on the action areas of sections E and F of chapter II of the Addis Ababa Action Agenda, as follows: debt and debt sustainability and interrelated systemic issues.
This article was initially published in Eurodad member SLUG's newsletter
Ten years ago, on 15 September 2008, the US investment bank Lehman Brothers collapsed. This collapse is largely seen as a key event of the North Atlantic financial crisis, which also had spillover effects on the rest of the world. Around the globe, this decade-long crisis has caused massive unemployment, as well as rising poverty and inequality. It has been used and abused to slash people’s rights – in particular the rights of workers – while the financial sector that caused the crisis has benefited from huge publicly funded bailouts. Ten years after the last crisis began, global debt levels are higher than before, and debt vulnerabilities are increasingly hard to manage. That’s why activists all over the world are standing up to call for fundamental reforms of the financial sector on 15 September 2018.
Ten years after the collapse of US investment bank Lehman Brothers (15 Sept 2008), the world is in deeper debt than it was in 2009 – the height of the financial crisis.
More than 600 Civil Society Organizations from all over the world have been working together for the last months via the Civil 20 (C20) to engage with the G20 on the most critical challenges facing today’s world.
