The 26 poorest nations in the world are more heavily in debt than any time in the last 18 years, according to a new report. Climate change and conflict are major drivers of poverty in the affected countries.
The World Bank published a new study late on Sunday highlighting 26 countries that “are in deeper debt than at any other time since 2006.”
The list includes Afghanistan, Yemen, Syria, and North Korea. Most of the other nations are in sub-Saharan Africa, and include Ethiopia and Chad.
With an annual per capita income of less than $1,145 (€1,050) a year, the World Bank said these countries “are poorer today on average than they were on the eve of COVID-19,even though the rest of the world has largely recovered.”
I’m pretty sure most countries are deep in debt… fiscally we’re still feeling pain from lockdowns and emergency pandemic spending.
However many of the rich countries are in debt in currency they control. The US, China and the EU mostly borrow in dollar, RMB and Euro. So if they have a massive debt crisis they just print a lot of money and can pay back the debt. That comes with inflation, but that is not that bad.
The poorest countries in the world mainly borrow in USD, which they can not just print. They have to net export to get USD to pay back debt. Add to that other massive problems. Afghanistan, Yemen, Syria and Ethiopia all have ongoing civil wars, Chad is landlocked and the country it would trade through is currently in a civil war. North Korea is sanctioned to hell and back. That makes paying back any debt much harder.
The IMF is a mafia. Forcing countries into debt is a policy choice, not an ethical choice.
There’s a lot of disagreement in the modern world about the validity of MMIT and how “real” debt is - but the debt in first world countries is still a real issue and essentially acts as a wealth transfer to the rich - private individuals and companies own that debt and earn interest on it that tax payers (bear in mind that the rich contribute relatively little overall taxes) have to service.
The deeper into debt we go the less spending power we’re left with.
Not necessarily. As long as the debt is invested well, it is absolutly fine. If the debt is used to increase the size of the economy, that means more taxes and hence the debt can pay itself. The other scenario is the government investing into something, which increases in value. Keep in mind that the governments rates are lower the private rates, so if a government builds a lot of housing for its citizens, that increases debt, but is still cheaper then everybody building their own housing themself. Similar effects can be had by buying companies.
Debt is a tool, it can be used for both good and bad. It really depends on how good the government is.
Ok but the govt is funding genocide, not housing.
That I absolutely agree with - debt that is taken on as an investment can be well worth it and, imo, a lot of our government debt is well spent (outside of military bullshit which is deeply wasteful).
The issue is that debt needs servicing and if it’s wasteful spending we’re committing to paying back more value than we’re borrowing. I’m not an anti-debt person, I think borrowing for investment is a generally good idea - I’m just opposed to a certain vein of modern monetary theory that declares that US debt is unlimited and free because the world runs on the US dollar.
MMT would claim rather simply that the debt can be paid back by printing more money. More money in the system means more people are employed. If you have full employment, more money leads to inflation and to fight inflation governments need to raise taxes, to take money out of the system. Obviously taxes can not be raised to infinity.
So no MMT does not claim the US can just borrow money without long term costs.
A little but what most people don’t seem to be aware of is that most war spending far outstrips what was spent on lockdown etc. Yet, for some reason, this lesser amount is meant to be the cause of all economic misfortune right now.
Countries can cope with things like that well enough. The problem is, we’re no longer taxing the rich to pay for things, the way we always used to, anymore and most counties have been asset stripped by those very same people they used to tax properly.