Good Authority
What can be done about the unfolding sovereign debt crisis? Layna Mosley, an expert on the politics of debt, shares her expertise.
Feb 8, 2024
Layna Mosley, an expert on the politics of sovereign debt, discusses the reasons behind the debt crisis faced by developing economies, the impact of interest rates, challenges of renegotiating debt repayment, complexity in resolving debt crises, and radical solutions and political changes in the context of the sovereign debt crisis.
25:55
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Quick takeaways
- Developing countries are facing a significant debt crisis, leading to economic challenges, decreased capital supply, and hindering social programs and economic growth.
- Debt crises often result in negative economic growth, increased poverty, and political instability, hindering investments in critical social programs like education and healthcare.
Deep dives
Debt crises in developing economies
Many developing countries are facing debt crises, as highlighted in a recent report by the World Bank. Lower middle-income countries accumulated significant debt during the 2010s, thanks to easier access to credit and low interest rates. Private investors were attracted to bonds issued by these countries, while China also became a major bilateral lender. The pandemic further exacerbated the situation, as countries faced increased financing burdens and decreased capital supply. The debt servicing costs have risen significantly, leading to economic and political challenges. Developing countries are spending a large portion of their budgets on debt servicing, impacting social programs and hindering economic growth.
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