Had a request to look at some stuff in the latest WEO. For fun, I compiled the countries with the highest projected interest to government revenue ratios in 2025. Egypt and Pakistan are on a league of their own, 6 of the top 10 are African countries, and notable presence of India in this group 🧐

Interesting analysis of the relationship between external public debt service and public expenditures. Expenditure in areas such as agriculture, environment and education tends to decrease when debt service goes up (with the caveat that the analysis doesn't mean to establish a causal relationship).

Net negative transfers on external public debt in middle and low-income countries continued in 2023. Public sectors in these countries paid more to creditors than they received in fresh funding. Multilaterals are providing net positive flows, while private creditors continue to drain resources.

Great overview of status and main characteristics of the wave of recent debt restructurings by JPM. Useful to think about comparisons with historical benchmarks. In most cases NPV relief is below historical median of 38-42%. A harbinger of serial restructurings?

IMF surcharges reached US$ 1.9 billion, equivalent to 53% of lending income and 39% of operational income in FY2024. Mind you, these profits were made from the most vulnerable borrowers of the Fund. Unfortunately, the recent reform failed to address the structural problems of the policy.

Public statisticians specialised in development assistance and climate finance accounting gimmicks looking at the COP29 text.

Vasili Grossman sobre la tragedia de un genocidio

A core responsibility of the Fund is to provide financial assistance to countries experiencing balance of payment problems to accomplish the goals below. Those with keen eyes will notice that there is nothing in there about the Fund being a for-profit institution.

On paper, increasing the PRGT’s long-term annual financing to $3.6B and reducing charges and surcharges by $1.2B for borrowing countries sounds great. But the issue isn't the what, it’s the how.

On the changes to the surcharge policy…

Quick estimation of impact of increasing IMF surcharge threshold from 187.5 to 300% based on the FT piece by Stiglitz. The results show a mixed picture. There would a sharp drop in countries affected, but those that remain would still pay over US$ 4 billion to the IMF in next 3 years.

Maldives is tethering on the edge of the default. A quick look at the latest IMF DSA helps to understand how dire is the situation. Country is projected to spend an average of 87% (!) of government revenues on debt service between 2024 and 2028 🤯
www.bloomberg.com/news/article...

It’s not a Blue Sky but nonetheless pretty majestic way to end the week 🌈

Great article from @nytimes.com on the worsening debt crisis in Africa using figures from @unctad.bsky.social "A World of Debt Report". Using defaults as a metric of distress is the wrong metric, when billions are experiencing the consequences of a dysfunctional international financial architecture.

Lack of resources is hampering the response to the Mpox global health emergency. The outbreak could have been contained early on with adequate funding and measures. However, top 5 countries most affect spend collectively almost 4 times more on debt than health care.

Real wages of Greek workers have fallen by more than 20% since 2009. This is not an accident. Is the direct result of a policy of domestic absorption suppression designed to free up resources to meet external claims.
www.kepe.gr/wp-content/u...
h/t
@yiannismouzakis.bsky.social

An alternative perspective on market access challenges faced by African countries. Average volumes of issuance have steadily declined since 2016. Restrictions on access to financing and high costs are likely to exacerbate net negative transfer problems.

When looking at the history of debt crisis resolution, simple solutions do have their merits 😉