Category: Debt

Gendering the debt crisis: Feminists on Sri Lanka鈥檚 financial crisis

kanchanaruwanpuraguse1 Comment

By Kanchana N. Ruwanpura, Bhumika Muchhala and Smriti Rao

Countless images of women carers flitted through April-July 2022 on Sri Lankan television screens, social media, and newspapers. Carers with young children, mothers with new-borns leaving them with equally young children while they stood in queue for gas or kerosene, children doing their homework on tuk-tuks while their parents got in line for petrol and diesel. Yet, Sri Lankan policy pronouncements rarely mention working-class women. In a country where women comprise 52% of the population, this is astounding. Especially so when the dominant three foreign exchange earners for the country 鈥� garments, tea exports and migrant workers to the Middle East 鈥� rest on the efforts of women workers. 

In the current response to Sri Lanka鈥檚 debt crisis, the voices and needs of working-class women are once again being ignored by policymakers, despite the evidence all-around of women intensifying their unpaid labour even as the conditions under which they perform paid labour deteriorate. 

As feminist economists, our argument is straightforward: debt justice is a feminist value and principle. And at the core of our understanding of debt justice is the principle that working class women cannot be made to pay for the 鈥榦dious debt鈥� generated by the recklessness and corruption of (almost entirely male) Sri Lankan political elites.

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Building up debt traps: Risk, climate adaptation and microfinance

vincentguermond1 Comment

How to adapt to a changing climate is one of the foremost questions of our era. In the last decade, microfinance has shot to prominence as a highly-promoted tool of adaptation to climate and environmental change. In commissioned by the Grameen Foundation and Oxfam US, Dowla argues that 鈥榳ithin the populations that will be most affected by global warming, the plight of many individuals is linked to the ability of microfinance institutions to adapt to the consequences of climate change鈥�.

With access to already-existing as well as newly-adapted financial products and ser颅vices, the argument goes that people and communities will be better placed to . 鈥楪reen microfinance鈥� would facilitate adaptation in two key ways: via coping capacity enhancement, and via adaptive capacity enhancement. Recommended strategies include improving access to microcredit for climate change responses as well as promoting insurance schemes to reduce the burden of climate risk on society.

In contrast to these emerging discourses and practices that frame microfinance as a key tool of climate adaptation, our recent research with rice farmers in rural Cambodia finds that microfinance loans are leading to an over-indebtedness emergency that significantly undermines borrowers鈥� long-term coping and adaptive capacity in a changing climate. Such loans often push households to borrow more, work more, sacrifice food quality and quantity, quit farming, and erode and sell their assets, including land. The cost of financialised coping strategies can trap rural populaces in financial obligations which they struggle to service and which manifests ultimately as over-indebtedness. Microfinance ends up promoting : one that is individualised, incremental, and geared towards the further integration of populations into processes of capital accumulation.

This form of adaptation is highly profitable. Indeed, as Dowla argues in that same , each new climate-linked shock 鈥榦pens up opportunities for the microfinance institutions and their clients鈥�. Yet the corollary to this profitability is that the costs of such an adaptation tend to be borne by the poor, who find themselves exposed not only to the rigours of the environment but now the global market too.

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Price Wars: How the Commodities Markets Made Our Chaotic World: Q&A with Rupert Russel

Farwa Sial1 Comment

In Price Wars: How the Commodities Markets Made Our Chaotic World, sociologist and filmmaker Rupert Russell travelled to some of the world鈥檚 most chaotic places: war zones in Ukraine, Iraq, and Somalia, the climate wars in Kenya and Guatemala, and Venezuela鈥檚 economic catastrophe. Told as gonzo investigation into what made the 2010s so tumultuous, Russell links each of these eruptions to swings in commodity prices, and the financial speculators whose bets set their prices.

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Green financialization and de-risking in Zambia鈥檚 renewable energy transition

Simone ClaarLeave a comment

By Simone Claar and

Zambia鈥檚 has a history full of hopeful prospects and broken dreams. In the 1980s and again in the early 2010s, Zambia experienced an economic upswing. Labelled as an emerging middle-income country and called the new 鈥�, a mix of copper extractivism, an aspiring tourism sector, as well as political stability led to an impressive rise. However, the phase was short-lived, as Zambia’s political economy remains fragile: dependent on the price of copper and the world market, it is regularly on the verge of state bankruptcy due to a significant  burden. A history of structural adjustment programs in exchange for IMF loans and dependency on billion-scale Chinese loans means that Zambia became the first African country to declare bankruptcy in the wake of the Covid pandemic, first asking for a moratorium, and later for restructuring its Eurobond loans and Chinese loans. In this context, Zambia’s dependence on development financing is highly evident and deeply anchored in the state structures. Zambia’s political economy of energy and the ongoing energy transition reflect this tedious situation. Rising energy demands and lack of investment mean that widespread load shedding has become a frequent phenomenon. Climate change and recurring droughts negatively affect hydropower performance, which makes up 95 per cent of installed capacity. The current roll-out of renewable energy is a beacon of hope. Nevertheless, its financial structures give rise to the assumption that Zambia may also be the first African state where the miracle of green capitalism and “white magic” () is becoming manifest, resulting in both shiny solar panels and a loss of political and economic sovereignty. Analyzing Zambia’s energy transition’s political and financial toolbox, we delineate how green financialization and de-risking are executed based on blended development finance. 

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The聽frailties聽of聽diaspora bonds聽

Aleksandr V. GevorkyanLeave a comment

The interest in聽diaspora bonds聽is sustained by the theoretical potential聽聽in聽poor economies by raising funds from聽expatriate communities, often labor migrants, living abroad.聽At the start of the COVID-19 pandemic in 2020,聽as聽developing nations聽faced聽sudden reversals聽in聽capital flows, diaspora bonds聽聽to聽counter聽the international capital markets鈥櫬爒olatility.聽A year later, the聽聽by the international institutional investors may prompt聽renewed calls for tapping into diaspora. But聽is the alternative scheme so easily deployable?聽

Diaspora bonds are sovereign debt securities issued by countries appealing to the altruistic motives of their cultural and national diasporas across the world. Historically, there have been several attempts to leverage the diaspora premium, with Israel and India running the most effective . 

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The聽Geopolitics of聽Financialisation聽and Development: Interview with Ilias Alami

Ilias ALAMI3 Comments

This聽interview聽was originally聽published in German in the special issue on聽financialisation聽and development policies of the journal聽Peripherie, September 2021, No. 162/163. Frauke Banse and Anil Shah聽(both based at Kassel University)聽spoke with political聽economist聽Ilias Alami聽(Maastricht聽University)聽about聽some of his recent work聽on the relationship between geopolitics, financial flows for development and emerging forms of聽鈥榮tate capitalism,鈥櫬燼s well as related new imperialist formations. The聽interview was conducted via email in May 2021.聽聽

The interview covers a聽series聽of聽International Political Economy聽topics.聽Ilias聽first locates the emergence of the聽Wall Street Consensus in the long and turbulent histories of the relation between finance and development聽as well as in聽secular聽capitalist transformations. He then聽outlines聽some of the conceptual tools he鈥檚 developed聽in his work聽in order to make sense of the聽contemporary聽interconnections聽of money and finance聽and the reproduction of聽imperialism and race/coloniality.聽Next,聽he situates these interconnections within broader scholarly debates about聽financialisation聽and聽highlights聽the similarities and differences between ongoing sovereign debt crises in the global South and the so-called 1980s 鈥楾hird World debt crisis.鈥� Finally,聽Ilias聽discusses the聽recent聽emergence of new forms of聽鈥榮tate capitalism鈥櫬燼nd their聽complex relation聽to the extension聽and deepening聽of market-based finance.聽

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Multilateral Development Banks: A system of Debt or Development?

SusanEngel_uow5 Comments

By Susan Engel and

Most people interested in development know about the World Bank and probably some of the bigger regional development banks, like the Asian Development Bank. But few people realise there is a system of 30 functioning multilateral development banks (MDBs). Indeed, we did not initially realise there were quite so many because there was no comprehensive tally or an academic study analysing them all. We set out to explore whether the MDBs work as a system and what role they play in promoting both debt and development so here is a short summary of some of our key finding on these three issues.

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Haemorrhaging Zambia: Prequel to the Current Debt Crisis

Andrew M. Fischer9 Comments

Following a stand-off with commercial creditors and protracted but unresolved negotiations with the IMF, Zambia defaulted on its external sovereign debt on 13 November this year. While most commentary has focused exclusively on the government鈥檚 sovereign borrowing, our own research has detected massive outflows of private wealth over the past fifteen years, hidden away on an obscure part of the country鈥檚 financial account. The outflows are most likely related to the large mining companies that dominate the country鈥檚 international trade. With many other African countries also facing debt distress, the lessons of this huge siphoning of wealth from the Zambian economy need extra attention within discussions about debt justice in the current crisis. We explain here what we鈥檝e found.

Zambia was already debt-stressed going into the COVID pandemic. The economy was hard hit following the sharp fall in international copper prices from 2013 to 2016, especially that copper made up about (including unrefined, cathodes and alloys). Following a , the government entered into negotiations with the IMF but never agreed on a programme. There was some improvement in macroeconomic outlook in 2017 due to rising copper prices, which sent international investors throttling back into . However, international investors again turned against the country in 2018 in the midst of the , which compounded the effects of . As a result, the government was already teetering on the edge of default on the eve of the COVID-19 pandemic. The economic fall-out of the pandemic has since pushed the country over the edge (see an excellent analysis ).

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