28 months later spread to paris7/30/2023 The Open Society Foundation’s report, “The Human Costs of the Failing Global Debt System,” launched on Wednesday online and at the summit in Paris, seeks to link the two. Too often such stories are reported in one of two ways: abstract reports on debt figures, and anecdotal evidence about how the crisis is experienced on the ground. Africa and Latin America are hardest hit. The non-governmental organization Debt Justice estimates that 54 countries are currently in debt crisis ( defined as having a large financial imbalance with the rest of the world and large government payments on external debt), up from 22 in 2015 and 31 in 2018. The overlapping shocks of the COVID-19 pandemic, the Russia-Ukraine war, and rising interest rates has meant 14 defaults since 2020, compared with 19 defaults from 2000 to 2019. But tragically, it has not managed to focus simultaneously on the other great calamity of our polycrisis age: the debt crisis. The West is rightly focused on Ukraine’s defense of its sovereignty and democracy from Russia’s invasion. This week, international leaders gather in Paris for the Summit for a New Global Financing Pact as a vicious financial bushfire rages across low- and middle-income countries. Applied to Zambia’s recent default, that would mean an additional 3,079 infant deaths per year by 2030, the report notes. Drawing on their research with Carmen Reinhart, former World Bank chief economist, Graf von Luckner and Farah-Yacoub show that, on average since 1960, countries that defaulted saw an increase of 10 percentage points in infant deaths a decade later. They note that Zambia’s last debt crisis in the 1980s saw life expectancy fall from 53 years to 45 years over the decade following the default (it rebounded to 62 years by 2020). In it, Clemens Graf von Luckner and Juan Farah-Yacoub, graduate students at Sciences Po and Harvard University, respectively, chart the human costs of inaction on global debt. Whereas Silicon Valley Bank was bailed out in three days, Zambia has waited almost three years.Ī new report supported by Open Society Foundations, of which I am president, reveals the devastating impact of such delays. The country has been in economic limbo ever since.Īs of this article’s publication, the Zambian government is reportedly-at long last-on the verge of a restructuring agreement with its bilateral creditors. The cost of essentials such as food, energy, and transportation soared businesses laid off workers public-sector salary payments were delayed. With its wealth of raw materials and its booming capital, Lusaka, it long looked set to be one of the more successful states of Sub-Saharan Africa. But reckless borrowing, combined with the economic fallout of the COVID-19 pandemic, saw Zambia default on its debt in November 2020. Until recently, this southern African country with a population of 19 million had for three decades been (for the most part) a functional multiethnic, multi-party democracy. Consider Zambia, and a tale of great potential being crushed by the millstone of debt.
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