Rising numbers of countries in debt crisis, says charity

14 May 18

Lenders and borrowers must be “more responsible” as debt crises are growing across the globe, a charity has warned.

A total of 31 countries are now in debt crisis, up from 27 last year and 22 in 2015, figures from the Jubilee Debt Campaign have revealed.  

The charity warned that a further 82 countries are at risk of a debt crisis.

Tim Jones, economist at the Jubilee Debt Campaign, said: “There was insufficient action to prevent future crises and now we are seeing a worrying spread of new crises across the world.

“We urgently need more responsible lending and borrowing, and mechanisms to ensure reckless lenders pay their share of the costs of crises when they occur.”

The charity said countries classify as in debt crisis if they have a large financial imbalance with the rest of the world and high government payments on external debt as a proportion of revenue.

It called for the cancellation of unpayable developing country debt, as March figures analysed by the charity found that developing country debt payments had increased by 60% in three years.

The figures are now at the highest level since 2004.

The IMF and World Bank only conduct debt sustainability assessments for 67 of the most impoverished countries in the world. Of these, it has assessed that 30 are in debt distress or “high risk of being so”, up from 15 in 2013, the Jubilee campaign said.

In contrast, only 20 are at “low risk”, down from 24 in 2013.

Jones said: “Recent experience has shown debt crises can affect people in all countries and can result from both government and private sector borrowing and lending.

“These figures show there are already debt crises on all continents, but even more countries are at risk of economic shocks turning vulnerability into a full-blown crisis.”

A number of impoverished countries have been hit by the fall in global commodity prices, including Ghana, Laos, Mongolia and Mozambique.

Eurozone countries hit by the 2008 crash and austerity policies, including Greece, Ireland and Portugal, have also marked as in debt crisis.

A number of countries have had high debts for a many years, even decades, but have never been allowed into debt relief schemes, including Lebanon, Jamaica, Grenada and Sri Lanka, the analysis said.

The Jubilee movement has won $130bn of debt cancellation for impoverished countries, leading to more spending on health and education, Jones said.

The Jubilee Debt Campaign is a UK charity working to end poverty caused by debt.

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