Debt Developements – what’s happening in the world of debt?



1) Zimbabwe has made initial steps towards entering the Highly Indebted Poor Country (HIPC) initiative by agreeing a Staff Monitored Programme with the International Monetary Fund (IMF). This does not involve any new loans but imposes IMF conditions on Zimbabwe’s government including a hiring freeze for civil servants, increased transparency regarding revenues from diamond sales, and a reduction in the primary fiscal deficit from 0.5% of GDP (2012) to 0.2% GDO in 20131.

 The Zimbabwe Coalition on Debt and Development (ZCDD) has requested the new government conducts a debt audit and is calling on the UK government, IMF and other lenders to take part and make transparent all information on loans given to the African country in the past2. (Currently the Zimbabwean government owes approximately £5.9bn to foreign countries, international institutions and foreign private creditors. It is defaulting on its repayments and so now required to pay back just £9.8m a year.) Jubilee Scotland has signed the call by ZCDD giving the proposal its support.

 Standing in the way of progress is Robert Mugabe extending his 33 year rule for five more years following presidential elections at the start of August and his party, Zanu-PF, findings its position in government strengthened. It now occupies roughly three-quarters of seats and is able to rule alone. Many therefore remain fearful over the future of Zimbabwe’s economy particularly given the party’s now unfettered access to state resources and the likely increase in corruption this will support3.

 2) Senegal and Ghana have been judged by the IMF to be at low and moderate risk, respectively, of not being able to meet debt repayments. Assuming economic growth of approximately 5-8%, both countries are expected to see debt repayments reaching 15% of government revenue by 2020 despite them both having completed the HIPC process. This demonstrates the inadequacies of earlier debt cancellation processes, these countries still suffering under a burden of debt, the HIPC process whilst undoubtedly beneficial in many respects also having done little to prevent the build up of new bad debt.

 3) Somalia has been told by the IMF that it may be able to get debt relief within one to three years, presumably under HIPC which typically takes about two years to complete. Somalia’s central bank estimates the government’s external debt stands at $3.2bn4. What is not being discussed however is in what sense the new government in Somalia owes anything given the country had not had a government since the 1990s and money lent prior to this would have been written off by external creditors. We are yet to see how this will be negotiated.

 4) Greece has seen an increase in the national debt to a record high of 160.5% of GDP (a 24.1 percentage points increase since last year). This is the highest increase in Europe followed by Ireland (+18.3), Spain (+15.2), Portugal (+14.9) and Cyprus (+12.6). At the opposite end the biggest reductions in the national debt to GDP ratio were in Estonia (-5.1), Lithuania (-1.9) and Denmark (-0.2). Austerity measures in Greece have also increased, latest developments including the liberalising of trade laws and mandating of work on Sundays and holidays. Conditions for receiving 7bn Euros of support from international lenders have demanded laying off 12,500 civil servants (including police officers and teachers) by the end of the year. There has subsequently been more demonstrations and unrest this month across the country with seventeen separate trace unions coming together to lead the protests5.

5) Pakistan is due to be lent $5.3bn by the IMF to meet its existing debt repayments (estimated this year to be $6.2bn). Agreement has been reached with the IMF expected to sign off on this in September, although Pakistan’s government is hoping for another $2bn of loans to be added to this. The benefit is that previously Pakistan had been drawing on its currency reserves to meet payments – which halved in just one year between 2011/2 and 2012/3 – whereas now these reserves are more secure. However, we still see more debt accumulating and questions are raised over the extent to which tackling debt crises through more lending really offers a long-term and sustainable solution.

 6) Jamaican Environment Minister Robert Pickersgill has claimed that climate change is one of if not the most important threat the country faces in being able to repay its national debt6. As we saw in May 2013, Jamaica has recently signed a $1bn bailout loan agreement with the IMF to meet its debt repayments with a range of austerity conditions attached to it showing just how critical these issues facing the country are. This is also an important acknowledgement from a key government figure in a debtor country of the link between climate change and debt. There is much greater potential for successfully tackling sovereign debt crisis by viewing it within these wider contexts and it for this reason that Jubilee Scotland continues to support its member organisations and a range of other campaigns who are working to affect these issues.

7) Tunisia saw a bill to audit the country’s public debt submitted to the Tunisian Assembly almost exactly a year ago (July 2012) and yet in February of this year it was withdrawn. It has since languished with a variety of other projects, no political party willing to take it forward or take a position. A year on from the initial bill, new calls are being made by campaigners on the ground to make sure this is not forgotten and to have what would be an historic move, the first African parliament to legislate for a debt audit, brought into legislation7.


 8) The G20 Finance Ministers met in July with sovereign debt one of the items on the agenda. Unfortunately, instead of facing this challenge and thinking of new ways of dealing with debt crises, for example a fair and transparent debt workout mechanism as supported by EURODAD and Jubilee Scotland, they chose to focus on ‘strengthening the existing practices of public debt management’. These practices have been shown not to work and new solutions, not strengthening of failing practices, is arguably what are now needed. They also gave little attention to preventing future debt crises, even omitting to make reference to the UN Conference on Trade and Development (UNCTAD) Principles of responsible sovereign lending and borrowing. Instead of meeting the UN’s calls to provide further debt relief and new grant-financing to poor countries, they have also restated their support for activities of the IMF and World Bank– two rich-country dominated institutions often mistrusted by developing countries8. This is disappointing progress but shows why it is still important to continue putting pressure on G20 governments to consider and implement the alternative solutions being forwarded by academics, civil society groups, and campaigners.

9) Supachai Panitchpakdi, secretary-general of the United Nations Conference on Trade and Development (UNCTAD), has argued that to prevent any future global economic crisis a total overhaul of current financial institutions is needed, tantamount to a new Bretton Woods with a new structure of multilateral rules for international monetary and financial regulations. He has referred to the existing system of trade rules within the World Trade Organisation as an example on which this could be based. Crucially, he has recognised and is prioritising the need for developing countries in any new system to have a far greater voice than they currently and have historically enjoyed9.


 10) The UK is considering giving aid in the form of loans either through creating a new loan giving institution or a lending window within the Department for International Development (DfID). An announcement is currently expected in September. The UK government already gives much of its aid through loans via multilateral institutions. Jubilee Debt Campaign calculated that in 2010, $1.26 billion of UK aid money was given to multilateral institutions to then be used as loans. This was the second highest amount of any OECD country, after Japan ($2.23 billion)10. This is not a policy Jubilee Scotland supports with there being already an excessive amount of lending to developing countries and no provisions in place for resolving any debt crisis relating to these loans when they arise. Jubilee Debt Campaign has produced a more detailed paper arguing against turning aid into loans which can be downloaded here.

 11) UK Export Finance’s (UKEF) 2012-13 Annual Report revealed that it backed £4.3 billion of loans in the year, the largest amount for at least a decade. This includes a £2 billion loan to the absolute monarchy in Oman to buy Typhoon fighter aircraft. In total, UK Export Finance guaranteed loans for 138 projects11. Of these, only four had any assessment of the social, environmental, and human rights impacts.

 Projects which had no assessment included:

  • £4.2 million to Indonesia’s military for ‘intelligence equipment’

  • £1.1 million to Pakistan’s military for ‘hovercraft’. Pakistan is already heavily indebted, and due to spend over 20 per cent of government revenues on foreign debt payments this year.

  • £4.6 million to a mine in Sierra Leone, run by a London registered company

  • £15 million to a private equity fund in the Cayman Islands to buy aircraft

  • A £280,000 loan to The Gambian government for transport consultancy, without any consultation with the Department for International Development (DfID). As a low income country, such loans are meant to be referred to DfID, and Gambia’s high debt status means the IMF and World Bank say it should not be borrowing any ‘non-concessional’ loans, such as from UK Export Finance.

 These demonstrate the irresponsible lending practices of UKEF and reiterate the need for an ethical export credit guarantees agency. It also shows that despite assurances from UKEF (see below), as an agency it is still not consistently ensuring social, environmental, and human rights impacts are taken into account when making decisions.

UKEF also expects lending to increase further in future years, as banks increasingly want government guaranteed loans and the agency expands the ways in which it supports loans. For example, in the autumn UK Export Finance is due to launch a direct lending scheme, where it will directly lend money to buyers, instead of guaranteeing loans12.


 12) Amnesty International UK has launched a new report this month called A history of neglect: UK Export Finance and human rights’. The key problems identified in the report with UKEF are: 1) taking policy decisions without proper assessment of human rights impacts; 2) not being aligned with other parts of the UK government and their attempts to address the human rights impacts of UK companies abroad; 3) out of kilter with current standards and best practice; 4) ignoring recommendations of parliamentary committees on reforming UKEF; and 5) using deficiencies in standards set by the OECD to slide back on previous commitments. All of these confirm further the importance of End Britain’s Dodgy Deals campaign and Jubilee Scotland’s work with Clean Up Britain’s Exports to bring about reform of UKEF.

 Jubilee Scotland already campaigns for a new form of export credit guarantees which takes human rights issues into consideration when making any deal but with its specific human rights focus the Amnesty report provides further details on how to do this. Recommendations, for example include: imposing an explicit ban on supporting any projects involving or likely to involve child or forced labour; creating an explicit grievance mechanism for those adversely affected by any aspect of an export credit arrangement to lodge a complaint and obtain remedy; and adopting a ‘disclose or explain policy’ with a presumption of transparency unless there are compelling reasons for non-disclosure. The full report can be downloaded here.

 UKEF have responded stating they ‘comply with international agreements that are relevant to Export Credit Agencies (ECAs) and this includes the OECD Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence. This agreement sets out how ECAs should identify, consider and address the potential environmental, social and human rights (ESHR) impacts of the projects they are asked to support. The Common Approaches stipulate that projects should be benchmarked against international standards including the International Finance Corporation (IFC) Performance Standards (2012) which incorporate the provisions of International Bill of Human Rights relevant to private sector actors.’13

However, as seen above in the information taken from the 2012-13 Annual Report it is clear that very few of UKEF’s deals were actually subject to these types of impact assessment.


Produced by Charlotte Snelling, Jubilee Scotland Policy and Research assistant,


1 MF. (2013). Zimbabwe: Staff Monitored Program. 10/06/13.

10 Jones, T. (2012). The state of debt: Putting an end to 30 years of crisis. Jubilee Debt Campaign. May 2012; Jones, T (2013). Debt Policy Update – July 2013. Jubilee Debt Campaign. July 2013.

11 UK Export Finance. (2013). Export Credits Guarantee Department Annual Report and Accounts 2012-13. June 2013. ; Jones, T (2013). Debt Policy Update – July 2013. Jubilee Debt Campaign. July 2013.

12 Jones, T (2013). Debt Policy Update – July 2013. Jubilee Debt Campaign. July 2013.

One Response to Debt Developements – what’s happening in the world of debt?

  1. Miller gold says:

    Am Miller from Spain i want to testify of the good work
    done by a faithful DR EZUZU, a spell caster. in my life i
    never thought there is such thing as spiritual
    intercession. my problem started nine months back when
    the father of my kids started putting up some strange
    behavior, i never knew he was having an affair outside
    our matrimonial home. it dawn on me on that faithful day
    19th of April 21st 4:23pm when he came to the house to
    pick his things that was when i knew that situation has
    gotten out of hand and he then told me he was quitting
    the marriage which i have built for over seven years, i
    was confused and dumbfounded i called on family and
    friends but to no avail. two months after i started having
    problem with my kids welfare rent-age and all of it, i
    really went through hell. until a day i was browsing on the
    internet and i happen to meet a spell caster i never
    believed on this but i needed my man back so i gave the
    spell caster my problem at first i never trusted him so i
    was just doing it but you know a problem shared is half
    solved after a week my husband called me telling me that
    he his coming back home and that was all. now we are
    living happily and i still do contact him on this

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: