Of the $35 billion that the world’s 74 lowest-income nations will owe in debt service payments this year, about 37% — or $13.1 billion — is owed to Chinese entities, according to the World Bank. A similar amount, $13.4 billion, is owed to the private sector. Official bilateral debt to countries other than China accounts for only $8.6 billion, World Bank President David Malpass said Wednesday during an event hosted by the Peterson Institute for International Economics. Malpass said the Paris Club — the group of 22 mostly Western creditors — was once the main holder of lower-income countries’ debt. This allowed the group to reach deals on debt relief, creating solutions for nations that had trouble making payments on their loans.
However, reaching deals with major creditors outside the club, such as China and the private sector, is a more complex process, requiring each major creditor and bond-holder to enter into an agreement separately. The shifting nature of who has owned debt in the past decade effectively means no global system exists for dealing with a debt crisis. “The Paris Club portion of the debt that’s coming due — even for the IDA countries — is small, and so that poses a challenge for the world,” Malpass said, using an acronym for the International Development Association, the World Bank’s fund for the lowest-income nations. The $35 billion estimate for 2022 is a 45% increase over the total debt payments ultimately owed in 2020, according to the bank. “Many more countries are in a situation where their debt is unsustainable,” Malpass said. Often, these nations took on debt before the COVID-19 pandemic hit, and now there is “just not going to be enough money for them to pay the debt service.” Additionally, more central banks have taken on de facto debt through swap lines, adding to countries’ burdens, he noted. The $35 billion that governments owe and have guaranteed during 2022 dwarfs the $24 billion that donors pledged in December for the most recent round of IDA funding, which is meant to last three years. Malpass said that Chinese-owned debt suffers from a lack of transparency around the loans, including nondisclosure agreements attached to lending packages. This makes the deals hard to track. Moreover, Beijing-controlled creditors have continued to take “full payments” during the pandemic, Malpass said, despite an effort to freeze such transfers with the world economy in turmoil.
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One hundred trillion dollars—that’s 100,000,000,000,000—is the largest denomination of currency ever issued. 1 The Zimbabwean government issued the Z$100 trillion bill in early 2009, among the last in a series of ever higher denominations distributed as inflation eroded purchasing power. When Zimbabwe attained independence in 1980, Z$2, Z$5, Z$10 and Z$20 denominations circulated, replaced three decades later by bills in the thousands and ultimately in the millions and trillions as the government sought to prop up a weakening economy amid spiralling inflation. Shortly after the Z$100 trillion note began circulating, the Zimbabwean dollar was officially abandoned in favour of foreign currencies. From 2007 to 2008, the local legal tender lost more than 99.9 percent of its value (Hanke 2008). This marked a reversal of fortune from independence, when the value of one Zimbabwe dollar equalled US$1.54. Zimbabwe’s extreme and uncontrollable inflation made it the first—and so far only—country in the 21st century to experience a hyperinflationary episode. Hyperinflation devastates people and countries. Zimbabwe, once considered the breadbasket of Africa, was reduced to the continent’s beggar within a few years; its citizens were pushed into poverty and often forced to emigrate. The country’s experience shows how a relatively self-sustaining nation at independence fell victim to out-of-control inflation and the severe erosion of wealth. The causes of Zimbabwe’s hyperinflation, its effects and how it was stopped are particularly instructive. In his seminal work, Phillip Cagan defined hyperinflation as beginning when monthly inflation rates initially exceed 50 percent. It ends in the month before the rate declines below 50 percent, where it must remain for at least a year (Cagan 1956). Zimbabwe entered the hyperinflationary era in March 2007; the period ended when the nation abandoned its currency in 2009 (Chart 1). Bouts of hyperinflation are mostly accompanied by rapidly increasing money supply needed to finance large fiscal deficits arising from war, revolution, the end of empires and the establishment of new states. Hyperinflation, as Cagan defined it, initially appeared during the French Revolution, when the monthly rate peaked at 143 percent in December 1795. More than a century elapsed before hyperinflation appeared again. During the 20th century, hyperinflation occurred 28 times, often associated with the monetary chaos involving two world wars and the collapse of communism (Bernholz 2003). Zimbabwe’s hyperinflation of 2007–09 represents the world’s 30th occurrence as well as the continent’s second bout (after a 1991–94 episode in the Congo).
It is widely expected that a further cut of 100 basis points to 14 percent will follow this week. The policy differs from all economic textbooks. Normally, policymakers try to curb inflation with interest rate hikes. The inflation rate in Turkey is already above 20 percent. Turks took to the streets last weekend to protest the rising cost of living.
"The peculiarity of Africa is that it does not have the financial means today to protect and revive its economy like all the other continents have done," French Finance Minister Bruno Le Maire told RFI radio in May." World finance chiefs agreed in April to boost reserves (SDR) at the International Monetary Fund (IMF) by $650 billion and extend a debt-servicing freeze to help developing countries deal with the pandemic, although only $34 billion will be allocated to Africa. "France wants this to go much further by reallocating SDRs that are (scheduled) for developed countries," an official from the French presidency briefed reporters ahead of the summit." Macron has said he believes Africa needs a "New Deal" to give the continent a breath of fresh air. And today, he called on G7 nations to find an agreement as part of efforts to reallocate $100 billion in IMF Special Drawing Rights (SDR) to African states.
So how do we pay for the bailout? Macron told a news conference he would like the sale of gold reserves to help finance this planned aid for Africa. So is Macron about to join the hall of fame of infamous leaders selling gold at just the wrong time? Will the spotprice of Gold be affected as when Gordon Brown, UK Chancellor, sold gold in 1999? Or do you remember the effect of the sell of gold in 2016 by The Bank of Canada? Just look down at the grpah below. The “Belt and Road Initiative” was announced by the Chinese government in 2013 as a global trade strategy based on the ancient Silk Road trading route. It aims to develop a new Silk Road economic belt and 21st century maritime Silk Road by promoting economic cooperation across Asia, Africa and Europe. The initiative combines new and older projects and includes improved soft and hard infrastructure, and even cultural ties. The plan was announced in 2013 and the first project start in 2019 and then whole plan should be finalized in 2049. MEASURING SENTIMENT China is providing massive financing to participating countries, which currently officially number 66, for the development of infrastructure. Many of the recipients are developing countries which see China’s plan as an opportunity to boost their local economies. There is no firm evidence to date of how successful these projects have been in fulfilling the expectations of participating belt and road countries, but there are concerns that some projects lack regulation and coordination with existing markets. Critics of the belt and road scheme believe it represents a risk for participating countries that they will be left with unprofitable, unnecessary infrastructure. One of the biggest global concerns is that developing countries will be left with a debt burden to China which they will be unable to meet. The Brussels-based think tank Bruegel set out to gauge perception of the belt and road scheme among participating and non-participating countries. Using the Global Database of Events, Language and Tone, Bruegel conducted an analysis of broadcast, online and printed news from 132 countries between May 1, 2017 and April 25, 2018. Generally, the study found the belt and road scheme to be well perceived, with no significant gap between those countries participating and those which do not. Bruegel also used its dataset of media articles to identify the topics most frequently associated with the belt and road scheme, as well as how discussion of them affects perceptions of the scheme in different countries. “Trade” and “investment” were the two key topics identified and it appears from Bruegel’s analysis that frequent use of “trade” in media coverage in relation to the belt and road scheme leads to more negative perceptions. Reaction to “investment” as a belt and road topic was less clear, as Bruegel found it statistically irrelevant in countries’ perceptions of the belt and road plan. METHODOLOGY The tone of media coverage about the belt and road scheme in specific articles published in a country was calculated and the result was then aggregated with the average sentiment at country level, to build a scale, from the highest positive sentiment, 4.98 points (Botswana) to the lowest -2.8 (the Maldives). Also included in this visual analysis is an index of Operational Risk, developed by The Economist, which uses 10 criteria to quantify the risk to business profitability, based on present conditions and expectations for the median term. Among the criteria are: security, political stability, government effectiveness, foreign trade, the legal and regulatory environment, measured by a score from 0 to 100. Combined, the measurements of sentiment and operational risk in each country help to provide an understanding of the current scenario for the belt and road programme. DEBT SUSTAINABILITY Under the belt and road programme China provides loans to participating countries to develop their infrastructure. In a developing economy, infrastructure is the main engine and guarantee of growth but, when a country incurs too much debt without sufficient economic growth, the impact can be negative on people and the economy, as domestic spending on welfare and social services may be sacrificed to service the debt. According to a report from the Centre for Global Development, these are the 20 belt and road countries most vulnerable to debt distress: GEO-ECONOMIC VIEWS FROM OTHER NATIONS The great powers each have very different geo-commercial strategies, but all are characterised by an ambition to develop economic expansion plans which include neighbouring countries and, in many cases, other parts of the world. Initiatives include large communication infrastructure projects, diplomacy and closer economic ties and cooperation. Let's take a look at these initiatives that focus on Asia as an important part of their geo-economic vision. RUSSIA
Russia leads the Eurasian Economic Union, integrated together with Kazakhstan, Belarus and Armenia, and is considering strengthening this group through economic and diplomatic ties with the belt and road plan. Its geo-economic goals include expanding its natural gas pipelines to China. If you are advocating for lockdowns, you are complicit in tearing families apart. You are complicit in inflicting untold suffering on millions of people around the world. You are complicit in casting the poorest and most vulnerable in our societies into even further grinding poverty. You are complicit in murder.
MADRID, July 10 -- On behalf of the EU, Morocco is making it more difficult to flee across the Mediterranean to Spain. In fact, the number of refugees is decreasing. But the deal has fatal consequences for migrants, human rights activists say. "If only we could be left, we could save much more," says Manuel Capa. The trade unionist works for the sea rescue in the Spanish city of Valencia. If Morocco or Spain embark on a new course when it comes to migration, they will feel it immediately. And he does not like the new course of the Spanish government at all. According to the law of the sea every captain must take shipwrecked persons, if he is able to do so, Capa explains. Regardless of whose sea area he is in. "So, if a shipwrecked man was in the Moroccan Maritime Rescue Zone and Morocco did not take care of him because of the lack of resources or perhaps the will, then the Moroccans allowed us to go into their waters and save the humans." That has changed. A new protocol stipulates that Morocco is solely responsible for its zone. The Spanish saviors must often be left out. Trade unionist Capa says what happens to the people who are shipwrecked in Moroccan waters is incomprehensible. It remains unclear whether they were saved and if so, where they would be taken. Does the government accept dead? Helena Maleno from the non-governmental organization "Caminando Froteras" goes further. She accuses the Spanish government of a cynical game: "We're basically doing the same thing as Salvini: We're retreating, but not so obvious, of course, we can not pull out the sea rescue, but we're taking some risk with the new measures." Spain's motto is to close this route, whatever the cost. Maleno assumes that the government will not protest because of the dead. 140 million euros in aid The Spanish maritime rescue rejects the allegations. In the first half of the year, the number of registered deaths had dropped significantly. Currently there are 81 people who did not make it to Spain alive. Last year, at 151, it was almost twice as many. The fact is that Spain and Morocco are working together again on migration. Spain's head of state, Sánchez, has worked hard to ensure that the European Union gives Morocco more support in terms of border management. With success: the EU promised Morocco a total of 140 million euros in aid in January. The refugees are being transported inland And Morocco has delivered. Anyway, this is the conclusion reached by an internal paper of the EU Commission, which is available in the Spanish newspaper El País. Support for Morocco, both from Spain and from the European Commission, is the basis for the declining trend in arrivals, it says. The Moroccan government is also not overshadowing their successes: The authorities have this year so far prevented 25,000 people from reaching by sea illegally Spain, according to an official Moroccan side. Often, however, this is done with dubious methods, says Said Tbel, migration officer of the human rights organization Association marocaine des droits humains (AMDH) in Rabat: "Since last summer, Morocco has again resorted to methods that violate the rights of migrants." So many migrants were picked up on the coast in northern Morocco and spent in the south. It has become increasingly difficult for people to leave Morocco for Spain. Many boats were capsized, there are now many missing and dead. The human rights activist believes that the situation will worsen in the medium term. The Moroccan Ministry of the Interior was not available for an interview at short notice. Author: Lora Smith LAMPEDUSA, June 29 -- A German charity rescue ship with 40 migrants on board has defied authorities and docked in the port of the Italian island of Lampedusa after being at sea for more than two weeks. Italian news agency ANSA reported that an Italian customs police boat attempted to prevent the Sea-Watch 3 charity ship from docking on multiple occasions, but had to get out of the way in order to not be trapped against a wharf. Sea-Watch spokesman Ruben Neugebauer told the AFP news agency the ship's German captain Carola Rackete, 31, was arrested. The 40 migrants disembarked soon after the vessel docked early on Saturday, one kissing the ground, others hugging ship crew members before boarding a bus. Rackete was cuffed by police for refusing to obey a military vessel, after manoeuvring the ship into port without permission, a crime punishable by between three and 10 years in jail. While five European countries on Friday agreed to take in the migrants, permission for the Dutch-flagged Sea-Watch 3 to enter port and disembark the migrants did not come. Proud of our captain Rackete called the situation "incredibly tense" on Friday saying the migrants were finding the uncertainty "difficult ... psychologically". Matteo Salvini, Italy's interior minister and head of the right-wing League party, had previously said he would only allow Rackete to dock when other European Union states agree to immediately take the migrants. Even then, Italian authorities would seize the ship and prosecute its captain for assisting people-smugglers, he said. Premier Giuseppe Conte told reporters at the G20 summit in Osaka, Japan, on Friday three or four European countries were willing to take part in the redistribution of the migrants. In the meantime, prosecutors in Sicily launched a probe into Rackete on suspicion of aiding "illegal immigration". "Even though in the afternoon the prosecution has opened an investigation against me, at the same time they notified us that they will not help to bring the rescued off the ship," Rackete said in a video statement on Twitter. "I have decided to enter the harbour, which is free at night, on my own," she added. MADRID, June 27 -- Europe's record-breaking heatwave is forecast to intensify further on Thursday with authorities on high alert as temperatures threaten to exceed 40 degrees Celsius in some parts of the continent. The stifling heat prompted traffic restrictions in France, sparked forest fires in Spain, and fanned debate in Germany over public nudity as sweltering residents stripped down. Meteorologists blame a blast of hot air from northern Africa for the heat this week, which has already set new records in Europe for June. According to reports, the high temperatures have already claimed the lives of three people. Exceptional for arriving so early in summer, the heatwave will on Thursday and Friday likely send mercury above 40C in France, Spain and Greece. In Spain, hundreds of firefighters and soldiers, backed by water-dropping aircraft, battled on Wednesday to put out a wind-fuelled forest fire that erupted in Torre del Espanol in the northeastern region of Catalonia. The worst is expected on Friday when 33 of the 50 Spanish provinces face extreme temperatures, which could reach 44C in Girona. "Hell is coming," one Spanish TV weather presenter tweeted. In France, temperatures "unprecedented" for their timing and intensity since detailed surveys started in 1947 were expected to reach at least 39C over two-thirds of the country, said weather service Meteo-France. Health official Jerome Saloman said the effect of the extreme heat was starting to be felt in France, with an increase in weather-related calls to emergency medical services. Some schools were expected to close on Thursday and Friday while several cities - including Paris and Lyon - restricted traffic to limit a build-up of air pollution. French authorities were taking no chances after the August 2003 heatwave was blamed for 15,000 deaths in the country, with television and radio broadcasts issuing warnings. In Greece, where about 100 people died in last year's deadly fires at the Mati coastal resort, hospitals and officials were on red alert with temperatures of 45C. LAMPEDUSA, June 27 -- The "Sea-Watch 3" has been stopped by the Coast Guard off the coast of Lampedusa. The captain had previously overruled a ban on the Italian government - Interior Minister Salvini rages. The hope for a quick mooring in Lampedusa has not been fulfilled. Within sight of the port of the Italian island, the "Sea-Watch 3" has been stopped by Coast Guard boats. Shortly thereafter, financial police had come on board, reported Carola Rackete, the captain of the rescue ship in a video on Twitter: "They checked our ship's papers and the crew's passports," she said. "Now they are waiting for further instructions from their superiors, and I really hope they will get the rescued from the ship soon." Ship is in front of Lampedusa So far, however, the ship with 42 rescued on board further ahead of Lampedusa at anchor. Captain Rackete had overruled an explicit ban on the government in Rome with her decision to sail into Italian territorial waters. Minister of the Interior Matteo Salvini has repeatedly emphasized in recent days that he does not grant permission for the mooring of the ship of the German rescue organization. The European Court of Human Rights dismissed Italy's government on Tuesday and rejected an emergency petition from the Sea-Watch organization to land the rescued in Lampedusa. For the first time, a new law could be applied to those responsible for the "Sea-Watch 3", which the Government of Rome decided at the urging of Salvini in the middle of the month. It provides that those who bring rescuers to Italy without permission, the ship will be confiscated, and they have to pay fines of up to 50,000 euros. "We are not afraid of the consequences" Nevertheless, it was humanitarian duty to take course on Lampedusa, said Sea Watch spokesman Ruben Neugebauer. "We are not afraid of the consequences that threaten us, because we are convinced that it is the only right thing," he said. "We are the ones who defend human rights at sea against a European policy of foreclosure and drowning, and we are ready to accept the consequences." Many of the people still on board are exhausted, according to Neugebauer, some have threatened to jump overboard. Italy's Interior Minister, on the other hand, reacted indignantly to the arrival of the "Sea-Watch 3". Shortly after the announcement became known, Salvini reported by smartphone video from his ministerial office to speak. CAPE TOWN, May 12 -- The ruling African National Congress (ANC) has won South Africa's parliamentary elections with 57.5 percent of the vote, the electoral commission said, announcing the official results. Saturday's win assured a sixth straight term in power for the ANC. But the result was the worst-ever electoral showing for the party, which has ruled South Africa since the end of apartheid 25 years ago. Support for the ANC, which gained 62 percent in the previous election in 2014, has steadily declined since it took a record 69 percent of the vote in 2004. Saturday's electoral showing comes amid growing voter frustration over rampant corruption and high rates of unemployment. President Cyril Ramaphosa, who replaced scandal-plagued Jacob Zuma last year, now faces the challenge of regaining public confidence in a party that remains beset with internal divisions and which oversaw a raft of economic crises in the country. The result, which gives the ANC 230 seats in the 400-member parliament, will renew pressure on Ramaphosa to decisively deal with cabinet ministers accused of corruption. In a victory speech in the northern city of Pretoria, Ramaphosa said the election confirmed "freedom and democracy reign" in South Africa. "Our people have given all of the leaders of our country a firm mandate to build a better South Africa for all." Earlier in the day, Jessie Duarte, ANC deputy secretary-general, struck a more sombre tone, saying the party would move swiftly to counter corruption and increase economic growth. "We need to correct our mistakes," she said, adding that the election showed voters want an "ANC that is united, and in its unity remains true to the values and principles on which it was founded." Cape Town, May 9 -- At 9am on Thursday, South Africa's Electoral Commission results were showing the African National Congress in the lead. The country voted in national and provincial elections on May 8. Results for the three main political parties were as follows: ANC - 1.742.573 votes, or 55,04% Democratic Alliance - 824.328 votes, or 26,04% Economic Freedom Fighters - 260.507 votes, or 8,23% Election statistics: Total Valid Votes 3.165.859 Spoilt Votes 42.659 Total Votes Cast 3.208.518 Voter Turnout 64,79 % Registered Population 26.756.649 Total Voting Districts 22.925 Voting Districts Completed 5.883 (25,66%) CAPETOWN, May 8 -- South Africans are voting in presidential and parliamentary elections in what is being seen as a pivotal election after years of corruption scandals that have plagued the "rainbow nation". Some 26.8 million voters are registered to cast ballots at 22,925 polling stations. Polls opened at 7am (0500 GMT) and close 14 hours later. Early results will emerge on Thursday while the official winner will be declared on Saturday. The party that wins most seats in parliament selects the president, who will be sworn in on May 25. Voter turnout has been predicted at around 70 percent. But an hour after polls opened at Orlando West polling station in Soweto, an important site in the anti-apartheid struggle, the small queue of voters was a far cry from the vast crowds shown in images from the first democratic elections in 1994. An estimated six million under 30s have not registered to vote and there was a small minority of young voters waiting in line at the Orlando West polling station. Wednesday's vote comes 25 years after the end of apartheid. But despite the demise of the system of racial discrimination, the country remains divided by economic inequality. While dozens of parties are competing, the main contenders are the ruling African National Congress (ANC), Economic Freedom Fighters (EFF) and the Democratic Alliance (DA). The ANC is almost certain to win again. However, its reputation has been damaged in the last 10 years by a stream of scandals under former President Jacob Zuma. Zuma was forced to resign in 2018 and is currently on trial on corruption charges. His replacement, Cyril Ramaphosa, has a cleaner image. But he has lost votes in recent years to the EFF and its leader Julius Malema, who promises to redistribute white-owned land and nationalise the banks. The DA, meanwhile, has also eaten into the ANC's once-dominant share of the vote. In the last municipal elections, the DA won in two key cities - Johannesburg and Cape Town. The ANC - the liberation party that brought about the end of the racist apartheid regime and enfranchised black South Africans - will be challenged on whether it can win back disillusioned urban voters. Under South Africa's electoral system, citizens do not vote directly for the president, but a vote for the ANC is essentially a vote for Ramaphosa. TRIPOLI, April 20 -- Thousands of protesters took to the streets in Libya's capital, Tripoli, on Friday after US President Donald Trump praised Libya's Khalifa Haftar amid a military assault by the renegade general to seize the capital. A White House statement said Trump and Haftar spoke by phone on Monday "to discuss ongoing counterterrorism efforts to achieve peace and stability in Libya". On April 4, Haftar and his forces launched an offensive against the country's internationally recognised government, which is based in Tripoli. In their phone call, Trump "recognised Field Marshal Haftar's significant role in fighting terrorism and securing Libya's oil resources, and the two discussed a shared vision for Libya's transition to a stable, democratic political system." It was unclear why the White House waited several days to announce the phone call. Trump's praise for Haftar was seen in Tripoli as a reversal in US policy on Libya, as earlier this month, Secretary of State Mike Pompeo demanded an immediate halt to Haftar's offensive. Reports from Tripoli, said news of the conversation caused anger in the capital with residents perceiving the call as a show of support by Trump for Haftar's offensive. "People are very angry, thousands of people have come out here on the main streets and squares especially in Tripoli and they are calling on the international community to stop the military aggression by Haftar forces," he said. At least 2,000 people took part in Friday's protest in Tripoli's Martyrs' Square to protest the push on Tripoli by Haftar's Libyan National Army (LNA). Abdelrizaq Musheirib, a protester criticised Trump's call to the commander, telling Reuters news agency: "The call has no meaning but we will respond to it." The LNA launched the military campaign against Tripoli on April 4, saying it wanted to "cleanse" the country's western region of "remaining terrorist groups". Analysts say the offensive is threatening to reignite a full-blown civil war in the oil-rich country, which has been mired in chaos since the NATO-backed toppling of longtime ruler Muammar Gaddafi in 2011. The fighting on the outskirts of the city has killed at least 213 people and wounded more than 1,000 people, the World Health Organization said on Friday. More than 25,000 have been displaced, according to the United Nations. Haftar backs a rival administration in eastern Libya that refuses to recognise the authority of the UN-recognised Government of National Accord in Tripoli, led by Prime Minister Fayez al-Serraj. |
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