kmiainfo: The hunger economy How do international finance companies profit from the debts of poor countries? The hunger economy How do international finance companies profit from the debts of poor countries?

The hunger economy How do international finance companies profit from the debts of poor countries?

The hunger economy How do international finance companies profit from the debts of poor countries? Human rights reports have warned of international finance companies profiting from delaying the implementation of the debt forgiveness program for poor countries, which was launched by the Group of Twenty three years ago, while the profits of these companies may reach $ 3 billion, with the World Bank continuing to urge them to accelerate the forgiveness. The London-based human rights organization "Debt Justice" said that international financing companies are profiting from delaying the implementation of the debt forgiveness program launched by the Group of Twenty, which is intended for poor countries, at a time when the World Bank urged those companies to accelerate the application of exemptions, due to the heavy effects of those debts . on the economies of those countries. In 2020, the Group of Twenty launched a debt relief program targeting poor countries, to help them revive their economies and control the dire economic effects of the coronavirus outbreak. Profit from the debts of poor countries According to the rights group, the hardline stance taken by private creditors is blocking progress in debt relief for Ethiopia, Ghana, Sri Lanka, Suriname and Zambia that could help alleviate poverty. Those creditors whose profits from this situation could reach $3 billion. So far, Chad has been the only country that has benefited from the debt forgiveness program launched by the Group of Twenty in 2020. The "Debt Justice" organization said that private creditors are delaying the implementation of the program, in order to maximize the profits of their bond holdings. Among the largest of these creditors is the company "BlackRock", which is headquartered in New York. In a statement to the Guardian, a company spokesperson said : “BlackRock invests in emerging markets on behalf of our clients. As fiduciaries, the money we invest on their behalf is not our own money, it is mostly the money of ordinary people who are saving for retirement, and we have to act according to their best financial interests.” all the time". While the human rights organization rejects these justifications, and according to the executive director of “Debt Justice” Heidi Chow, “private lenders are greedy to eat more than their cake. They have already benefited from imposing high interest rates to cover the risks of their loans, and now that countries cannot pay, they They also want to benefit from the full payment." "Lenders must be forced to negotiate debt cancellation, and new legislation can do exactly that," she stressed. The World Bank and the International Monetary Fund urged private financing companies to respond to the implementation of debt relief programs, given the economic and humanitarian risks of these financial burdens on poor countries . How does debt affect poor countries? The accumulation of debt poses dire dangers to the economies of poor countries, on top of which is reducing countries’ benefit from their natural resources, because a large part of the revenues from those resources goes to repaying those debts, which reflects negatively on their investments in basic sectors such as education, health and infrastructure, and thus nullifies their chances of achieving development. Humanity. In addition to this, the accumulation of debt increases the vulnerability of the economies of poor countries, and makes them more vulnerable to economic shocks, such as natural disasters or sudden changes in commodity prices such as the one the world witnessed in the last year. While economic instability puts these countries in a debt spiral, their chances of getting out of it diminish. On top of all this, and because of their dependence on external spending, the highly indebted countries become less independent in their political decisions. In some cases, external creditors may set conditions for loans, such as requirements for implementing specific economic policies or prioritizing debt service payments over other government expenditures, such as the 2010-2015 debt crisis in Greece. In November 2020, the Group of Twenty launched a debt relief program targeting more than 46 countries, including Mali, Ethiopia, Ghana, Sri Lanka, Suriname and Zambia. The amount of debt that the program forgives is estimated at about $14.2 billion, to direct spending in those countries to combat the economic consequences of the health crisis.

Human rights reports have warned of international finance companies profiting from delaying the implementation of the debt forgiveness program for poor countries, which was launched by the Group of Twenty three years ago, while the profits of these companies may reach $ 3 billion, with the World Bank continuing to urge them to accelerate the forgiveness.

The London-based human rights organization "Debt Justice" said that international financing companies are profiting from delaying the implementation of the debt forgiveness program launched by the Group of Twenty, which is intended for poor countries, at a time when the World Bank urged those companies to accelerate the application of exemptions, due to the heavy effects of those debts . on the economies of those countries.

In 2020, the Group of Twenty launched a debt relief program targeting poor countries, to help them revive their economies and control the dire economic effects of the coronavirus outbreak.

Profit from the debts of poor countries

According to the rights group, the hardline stance taken by private creditors is blocking progress in debt relief for Ethiopia, Ghana, Sri Lanka, Suriname and Zambia that could help alleviate poverty. Those creditors whose profits from this situation could reach $3 billion.

So far, Chad has been the only country that has benefited from the debt forgiveness program launched by the Group of Twenty in 2020. The "Debt Justice" organization said that private creditors are delaying the implementation of the program, in order to maximize the profits of their bond holdings.

Among the largest of these creditors is the company "BlackRock", which is headquartered in New York. In a statement to the Guardian, a company spokesperson said : “BlackRock invests in emerging markets on behalf of our clients. As fiduciaries, the money we invest on their behalf is not our own money, it is mostly the money of ordinary people who are saving for retirement, and we have to act according to their best financial interests.” all the time".

While the human rights organization rejects these justifications, and according to the executive director of “Debt Justice” Heidi Chow, “private lenders are greedy to eat more than their cake. They have already benefited from imposing high interest rates to cover the risks of their loans, and now that countries cannot pay, they They also want to benefit from the full payment." "Lenders must be forced to negotiate debt cancellation, and new legislation can do exactly that," she stressed.

The World Bank and the International Monetary Fund urged private financing companies to respond to the implementation of debt relief programs, given the economic and humanitarian risks of these financial burdens on poor countries .

How does debt affect poor countries?

The accumulation of debt poses dire dangers to the economies of poor countries, on top of which is reducing countries’ benefit from their natural resources, because a large part of the revenues from those resources goes to repaying those debts, which reflects negatively on their investments in basic sectors such as education, health and infrastructure, and thus nullifies their chances of achieving development. Humanity.

In addition to this, the accumulation of debt increases the vulnerability of the economies of poor countries, and makes them more vulnerable to economic shocks, such as natural disasters or sudden changes in commodity prices such as the one the world witnessed in the last year. While economic instability puts these countries in a debt spiral, their chances of getting out of it diminish.

On top of all this, and because of their dependence on external spending, the highly indebted countries become less independent in their political decisions. In some cases, external creditors may set conditions for loans, such as requirements for implementing specific economic policies or prioritizing debt service payments over other government expenditures, such as the 2010-2015 debt crisis in Greece.

In November 2020, the Group of Twenty launched a debt relief program targeting more than 46 countries, including Mali, Ethiopia, Ghana, Sri Lanka, Suriname and Zambia. The amount of debt that the program forgives is estimated at about $14.2 billion, to direct spending in those countries to combat the economic consequences of the health crisis.
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