Developing countries in the stranglehold of debt

Demographic, Wild Cards

Developing countries in the stranglehold of debt.

The coronavirus pandemic and other aspects of the multidimensional crisis of global capitalism are enough to fully justify suspending debt repayment. Indeed priority must be given to protecting people against ecological, economic and public health disasters.

In the context of the current emergency, we have to assess longer trends that make it necessary to implement radical solutions to the issue of DCs’ debt. This is why we develop our analysis of factors that currently increase the unsustainability of the debt repayments claimed from countries in the Global South. We shall consider in turn the downward trend in commodity prices, the reduction of foreign exchange reserves, continued dependence on revenue from commodity export, the DCs’ debt payment calendar, with major repayments due between 2021 and 2025, mainly to private creditors, the drop in migrants’ remittances to their countries of origin, the back flow to the North of stock market investments, the perpetuation of capital flight.1 Payment rescheduling granted in 2020-2021 because of the pandemic by creditor countries that are members of the Paris Club and of the G20 only accounts for a small portion of repayments owed by developing countries.

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