Developing countries, including LDCs, at risk from US rate rise, debt charity warns

19 March, Larry Elliott, The Guardian: The expected rise in US interest rates will increase financial pressures on developing countries already struggling with a 60% jump in their debt repayments since 2014, a leading charity has warned. Five of the countries on the charity’s list – Angola, Lebanon, Ghana, Chad and Bhutan – were spending more than a third of government revenues on servicing debts. Countries with the highest external government debt payments as a proportion of revenue include a number of Least Developed Countries, including Angola, Chad and Bhutan.         

The Jubilee Debt Campaign said a study of 126 developing nations showed that they were devoting more than 10% of their revenues on average to paying the interest on money borrowed – the highest level since before the G7 agreement to write off the debts of the world’s poorest nations at Gleneagles, Scotland, in 2005.

Developing country debt moved down the international agenda following the Gleneagles agreement in which the G7 industrial countries agreed to spend £30bn writing off the debts owed to the International Monetary Fund and the World Bank by the 18 poor countries.

But developing country debt is now once again being closely monitored by the IMF, which says 30 of the 67 poor countries it assesses are in debt distress or at risk of being so.

Lending to developing countries almost doubled between 2008 and 2014 as low interest rates in the west led to a search for higher-yielding investments. A boom in commodity prices meant many poor countries borrowed in anticipation of tax receipts that have not materialised.

But the Jubilee Debt Campaign said the boom–bust in commodity prices was only one factor behind rising debt, pointing out that some countries were paying back money owed by former dictators, while others had been struggling with high debts for many years but had not been eligible for help. The campaign said developing countries were also vulnerable to a rise in global interest rates as central banks withdrew the support they have been providing since 2008.

The US Federal Reserve is expected to raise interest rates this week – with the financial markets expecting two or three further upward moves during 2018.

Tim Jones, an economist at the Jubilee Debt Campaign, said: “Debt payments for many countries have risen rapidly as a result of a lending boom and fall in commodity prices. The situation may worsen further as US dollar interest rates rise, and as other central banks reduce monetary stimulus. Debt payments are reducing government budgets when more spending is needed to meet the sustainable development goals.”

The US Federal Reserve is expected to raise interest rates this week, with markets expecting further rises. Photograph: AFP/Getty

External loans to developing country governments rose from $200bn per year in 2008 to $390bn in 2014 and while they have since dropped to $300-350bn per year from 2015-2017 they remained well above levels seen prior to the global financial crisis.

Commodity prices peaked in the middle of 2014 and more than halved over the next 18 months. Despite a recovery from their low in January 2016 they remain more than 40% lower than they were at their peak.

The Jubilee Debt Campaign said the fall in global commodity prices had reduced the income of many governments that are reliant on commodity exports for earnings. In addition, weaker commodity prices led to the exchange rates of developing countries falling against the US dollar, increasing the relative size of debt payments since external debts tend to be owed in dollars.

Angola and Mozambique, two sub-Saharan African countries, and Least Developed Countries, heavily dependent on commodity exports – had both seen falls of 50% in their exchange rates since 2014.

Jones said there had been a lack of transparency about how debts had been incurred. And he said private lenders should suffer from any restructuring agreements.

“Where there are debt crises, the risk is that the IMF will bail out reckless lenders, and the debt will remain with the country concerned,” Jones said. “Instead, reckless lenders need to be made to bear some of the costs of economic shocks through lower debt payments, allowing governments to maintain spending on essential services.”

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How successful were the millennium development goals?

John McArthur and Krista Rasmussen,  Brookings Institute, 30 March 2017: Did the United Nation’s millennium development goals (MDGs) make any difference? Perhaps no question is more important for assessing the results of global policy cooperation between 2000 and 2015. We highlight three key findings: At least 21 million extra lives were saved due to accelerated progress; some successes were more important than others; low income countries accelerated more than middle-income countries.

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Regional Comprehensive Economic Partnership (RCEP) an attack on food sovereignty and must be scrapped, say People’s Coalition on Food Sovereignty

In a statement issued on the eve of the RCEP meeting in Japan (March 3)  the PCFS says that any agreement reached will mean the poorest member-countries will suffer.

The PCFS say that RCEP will be a neoliberal trade deal covering 3.5 billion or almost half of the world’s population with a gross domestic product of USD 22.5 trillion, and will strengthen the monopoly control of the biggest agro-corporations within the 10 members of ASEAN, India, South Korea, New Zealand, Australia, Japan and China and even in the world.

The PCFS adds that the move for a Free Trade Agreement is led by China and will benefit the biggest Chinese capitalists more than any of RCEP member-countries.  Read the full statement below: Continue reading

Global Goals will not work unless Least Developed Countriese are made a top priority

post2015_cover24 September 2015: LDC Watch, the umbrella group for civil society organisations from Least Developed Countries has insisted that the Sustainable Development Goals will not succeed unless there are additional measures to help LDCs. These include an increase in ODI to LDCs, debt cancellation, technology transfer without intellectual property rights, measures to protect against the plunder of LDCs’ natural resources, common but differentied responsibilities and immediate finance to mitigate the effects of climate change. Continue reading

UNDP and UNAIDS support LDCs efforts to get access to medical treatment

medicine_10-4-098 June: UNDP and UNAIDS are supporting demands by LDC governments and civil society to extend the TRIPS exemption for medicine, a decision  that will be taken today (8 June) at the TRIPS Council Meeting. They say there is an urgent need for the international community to agree to measures to protect the health of people in LDCs

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EU Funding for Development, including support for LDCs

9zB414sBeC-jUxOWSFZkA2xFpF9cxSkHaD0kFuEz4kGxcAKqnXfi2o60KnM6cKe36IX4l9pIUNg-NNcJoi2tiSs6UAvrrMW5qJhlS8zuRo_m7hYwk-itojwsqhUJK3jo4ywW-W827 May, (devex) Richard Jones: Less than two months away from the third International Conference on Financing for Development in Addis Ababa, Ethiopia, many within the global development community are wondering whether top donors will step up to the challenge of financing the future sustainable development goals. Continue reading

London roundtable to discuss how to ensure LDCs benefit from the SDGs

Acharya1London, 23 June 2014: The UN Under-Secretary-General Gyan Chandra Acharya for Least Developed Countries, (UN-OHRLLS) is flying to London to head a roundtable discussion on 24 June on the ways to ensure that the Sustainable Development Goals and the post 2015 Agenda benefit the 48 Least Developed Countries (LDCs).The current list of LDCs includes 48 countries: 34 in Africa, 13 in Asia and Pacific and one in Latin America Continue reading

LDC and African governments block new trade facilitation agreement, which would have put them at a disadvantage

images (1)Matthew Schewel, 30 May (Inside trade): Efforts in the World Trade Organization to lay the groundwork for the implementation of the new Trade Facilitation (TF) Agreement hit an obstacle this week when African nations and least-developed countries (LDCs) proposed that the deal not enter finally into force until the conclusion of the Doha round, according to Geneva sources. Continue reading

Chinese pledge half of all foreign aid for Africa without preconditions

China in AfricaXinhua/Devex, 9 May: China will earmark more than half of its foreign aid for Africa and attach no preconditions, Chinese Premier Li Keqiang said on Thursday 8 May at a World Economic Forum meeting on Africa in Nigeria. “China will, as always, continue to increase its assistance to Africa in both quantity and quality to the extent of its ability, ensuring that more than half of its foreign aid will go to Africa,” Li said. Continue reading

Bangladesh: Rights groups want curbs on multinationals’ tax dodging

Daily Star, Bangladesh, 2 March 2014: Rights groups yesterday urged the government to immediately take punitive actions against the multinational companies that are dodging taxes through misuse of ‘transfer pricing’.Currently, multinational companies account for 10-15 percent of the government’s tax collections, while local companies provide around 34 percent, said Monower Mostafa, executive director of Development Synergy Institute. Continue reading