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Novara Media
ACFM Microdose: Making Sense of Sovereign Debt w/ Heidi Chow
Feb 2, 2025
Heidi Chow, the executive director of Debt Justice, dives into the complex world of sovereign debt, particularly affecting the Global South. She discusses how historical colonial legacies contribute to ongoing debt crises and sheds light on the detrimental role of international rating agencies. The conversation moves to the impact of the climate crisis on national borrowing, highlighting how high debt repayments hinder crucial climate action. Chow also advocates for systemic reforms and new frameworks to support debt-stricken nations, urging for immediate action against predatory lending practices.
01:09:08
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Quick takeaways
- Sovereign debt comprises domestic and external debt, significantly impacting the financial stability of Global South nations due to currency risks.
- Colonial legacies complicate the sovereign debt crisis in newly independent countries, forcing them into a cycle of dependency and borrowing.
Deep dives
Understanding Sovereign Debt
Sovereign debt refers to the debt owed by governments, which can be classified as domestic or external. Domestic debt is owed to entities within a country, while external debt is owed to foreign creditors, often in currencies such as US dollars. The distinction between these types of debt is vital, as many Global South nations face significant challenges with external debt, including higher interest rates and currency devaluation risks. In contrast, countries like the UK primarily deal with domestic debt, which is less susceptible to these destabilizing factors.
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