Debt crises on the rise, says Jubilee Debt Campaign

18 May 2018

iSTOCK

Produce at a street-market in Maputo, Mozambique, last June

Produce at a street-market in Maputo, Mozambique, last June

THE number of countries in debt crisis is rising, a report from the Jubilee Debt Campaign suggests.

The new figures, published on Wednesday, show that 31 countries are in a debt crisis, which is up from 27 in 2017 and 22 in 2015.

The campaign defines a country in debt crisis as somewhere with “a large financial imbalance with the rest of the world and high government payments on external debt as a proportion of revenue”.

The 31 countries include developing countries in the global South which have been hit hard by the fall in global commodity prices, such as Ghana and Mozambique, but also Eurozone countries that are still recovering from the 2008 crash and austerity, such as Greece and the Republic of Ireland.

Tim Jones, an economist at the Jubilee Debt Campaign, said: “The global Jubilee movement successfully won $130 billion of debt cancellation for some of the most impoverished countries, leading to increased spending on health and education.

“However, 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.

“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.”

The report goes on to say that another 82 countries are at risk of a public or private sector debt crisis, or both.

The Jubilee Debt Campaign says that the UK is at risk of a private debt crisis, and that the United States could face a private- and public-sector debt crisis.

The campaign said: “The analysis of risk of either a public or private sector debt crisis is based on a country having a significant financial imbalance with the rest of the world, and either a significant government debt or debt payments, or significant private sector debt, compared to the country or government’s capacity to repay.”

It has been supported in the past by bishops, including the former Bishop of Bath and Wells, the Rt Revd Peter Price (News, 15 February 2013).

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