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To finance development, many poor countries have to take recourse to external loans. By itself this is not bad or dangerous because the debt can be used to , f. i., invest in infrastructure, raising the output of the economy.
But if loans are taken and given without considering the economic capacity of the debtor, the repayment could become a problem. In the 1970s and 1980s this led to the so called “Third World Debt Crisis”. Today we can observe a similar trend: Poor countries in Africa, Asia and Latin America have comparatively easy access to fresh money because low interest rates in the Global North make investments in the Global South very attractive.
Rules for responsible borrowing and lending are important since they make clear, that creditor and debtor share responsibility for the success of the lending operation.
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New educational material on sovereign debt and climate change
As part of our 2020 campaign "Climate justice needs debt relief", erlassjahr.de produced four new educational activities on the complex topic of sovereign debt and climate change, targeted at pupils in secondary education (age 16 to 19). The activities complement the brochure "Debt crises affect people" (activities 1-12), published in…
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New focus papers on DSSI and IMF forecasts out now
Focus paper 3: "A debt moratorium for whom?" Given that the G20 Debt Service Suspension Initiative (DSSI) currently is more or less the only group-wise debt relief initiative in the COVID19-context, and given that one of its most important limitations so far has not been resolved, which is the…
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