ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

H T Parekh Finance Column

Climate negotiators are a cynical bunch. Historically, “climate change” has been the purview of technocrats at environmental ministries. But without new money from their treasuries, they have met....

The Zambian experience suggests that the prevailing international financial architecture aims to get bilateral creditors, in this case principally China, to carry the burden of a restructuring process which protects the interests of, and even favours, private creditors who leveraged cheap capital and rushed into the less developed country market in search of high yields.

Are our international financial institutions fit for the future? This is a question being asked at the annual meeting of the International Monetary Fund in Marrakesh. If one wants to think deeply about the IMF’s future, one need to go no further than to consider its past. Those assembled at Bretton Woods in 1944 were haunted by the memory of the beggar-thy-neighbour policies that contributed to the Great Depression and the march towards war. But much has passed since and ambition has been lost. Here are five things it could do today to make our international financial system better suited for an age of global shocks and crises, more symmetrical and better able to drive financial flows towards development.

A financially significant deal announced by the Government of Ecuador and Credit Suisse (prior to its merger with UBS) in May 2023, has raised the prospect of debt-stressed countries writing down distressed debt on favourable terms in return for a commitment to allocate part of the “savings” for conservation or climate projects. This “debt-for-nature” swap is one in a recent series which, unlike in the past, has been structured and arranged by private players, with “blue or green” bond issues that raise the money to finance the buyback of expensive debt at heavily discounted prices. The combination of debt reduction, improved debt terms and locked-in conservation spending is presented as a “win-win” outcome for all concerned. But as critics have been quick to point out, there is much to be wary of in these complex transactions.

Evidence from Ghana and reports from Sri Lanka indicate that the International Monetary Fund has introduced a new condition—reduction through the restructuring of domestic sovereign debt—into its adjustment toolkit for countries facing external debt stress. This tendency to blur the distinction between domestic and external debt has major implications, and amounts to imposing measures that enforce a new and additional form of debilitating austerity on these countries.

There is turmoil in banking in the United States (US) and Europe. It has taken the world by surprise. Banks were supposed to have become much safer following the regulations put in place after the....

This article is the second in a series of articles on monetary policy debates in the age when deglobalisation became a buzzword. Here, we begin our discussion of the ongoing economic experiment in Turkey as an example to elaborate on these debates. In the third article, we will turn our attention to the post-2018 Turkish currency crisis phase of the experiment by focusing on macroprudential measures, capital controls and central bank independence, as promised in the first article.

As the number of developing countries likely to default on external debt service commitments increases, the effort to resolve debt crises in countries that have defaulted many months back remains....

This article is the fi rst in a series of two articles on monetary policy debates in the age in which deglobalisation is a buzzword. The ongoing monetary policy debates of the age will be discussed by focusing on macroprudential measures, capital controls and central bank independence in Part II.

As India ascends to the Group of Twenty Presidency, internationalism is stuck. The Paris Agreement on climate change is deadlocked as countries point fi ngers at each other. Development assistance is being siphoned off into defence and foreign affairs budgets. And all the while global temperatures rise, and a silent debt crisis rips through the emerging world. Here are fi ve “asks” for India’s G20 Presidency to champion to unstick global fi nance and turn the billions being spent on addressing climate change into the trillions we need. They are highlights of what is being called the “Bridgetown Initiative” after a meeting of offi cials, academics and civil society hosted by Prime Minister Mia Mottley in Bridgetown.

When multiple crises confront global leaders, some yet-brewing ones tend to be ignored. One such is an(other) imminent external debt crisis in developing countries, which, as in the case of the COVID-19 crisis, is likely to be prolonged with long-term spillovers. However, while most observers admit that another external debt crisis is imminent, a commitment to find a lasting solution is absent. Not because the elements of such a solution are not obvious. With the COVID-19 pandemic and the Ukraine invasion having made this round of the debt crisis even more difficult to resolve, there is little option but to resort to a package that includes official debt write-offs, large private creditor haircuts and the channelling of cheap liquidity to less developed countries through mechanisms like enhanced Special Drawing Rights issues.