Recent Articles

Debt Justice

CPEC – A “game-changer” or another “East India Company”?

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China-Pakistan Economic Corridor (CPEC) is a big business proposition with huge Chinese investments spreading over 15 years having a total outlay of up to $46 billion: $35 billion on the energy sector in the mode of IPPs (independent Power Producers) and $ 11 billion for infrastructure development; like industrial zones roads and railways etc. A good part of these investment projects comprises loans from Chinese banks, of which full details are not available, generating fears of further indebtness of already ... Read More »

Cambodia rejects paying ‘dirty debt’ to the US

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By Vannarith Chheang (21 March 2017) The United States has renewed its demand for Cambodia to repay a war debt of $500m amid President Donald Trump’s push to improve the state budget. Such a demand has met with an outcry from Cambodian political leaders and their people, who have consistently called the debt “dirty” and “blood-stained”. Clearly, the memory of the United States’ war in Indochina continues to shape Cambodian perceptions of and foreign policy towards the US. Cambodia is reluctant to pay the debt. However, should ... Read More »

Three Waves of Debt Repudiations in the USA during19th Century

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(By Eric Toussaint) – 7 November The United States, on three separate occasions, governments have successfully repudiated public debts owed to private bankers. In the 1830s, four of the United States repudiated their debts – Mississippi, Arkansas, Florida and Michigan. |1| The creditors were mainly British. Alexander Nahum Sack writes in this regard: “One of the main reasons justifying these repudiations was the squandering of the sums borrowed: they were usually borrowed to establish banks or build railways; but the banks failed and the ... Read More »

Evolving nature of developing countries’ debt

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By Bodo Ellmers (18 August 2016):  This Eurodad disussion paper analyses the evolving nature of developing country debt and solutions for change. It aims to identify relevant reform processes on an international level, and more practically to keep progressive actors that want to drive change informed about existing opportunities. The nominal debt burden of developing countries has reached the highest level ever seen. While relative debt burdens decreased between 2000 and 2010, these trends have reversed in 2011. Since then debt ... Read More »

Pakistan’s unsustainable debts-Part II

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(By Maqsood A Butt) Public debts are a very useful tool by which governments can balance their budget in case their expenditure is more than their revenue. However, ideally this tool should be used only to borrow for development expenses, which creates infrastructure, ultimately generating resources to pay back the liability. These development projects, in addition to generating employment, promote economic growth thereby improving the citizen’s welfare. However, in Pakistan every government has been dependent on domestic and external borrowing to ... Read More »

Punjab foreign debt piles up

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(Nasir Jamal): Punjab foreign debt stock is projected to steeply rise by a fifth to Rs620 billion at the end of the next financial year, mainly because of a Chinese loan of Rs.85 billion for the controversial Lahore Orange Line Metro Train Project. According to the budget 2016-17 documents, the province`s outstanding foreign debt stock is estimated to spike to around Rs516bn at the end of the year from Rs436bn a yearago. The province has accumulated foreign debt of Rs79.9hn ... Read More »

Pakistan’s unsustainable debts-Part I

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(By Maqsood A Butt) Up to four years after the creation of Pakistan, we were debt-free. Then came the World Bank that convinced our then rulers to borrow from the bank, promising it would jump-start the economy. Whether the economy jumpstarted or not, it is now clear that the unfortunate foundation of reckless borrowing was laid. That also gave our rulers the easiest way of creating money to be spent on unproductive projects that did not create any real revenue ... Read More »

Govt. plans to further contract $8bn foreign loans

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(Khaleeq Kiani):  Despite a 39 per cent cut in assistance from the United States, the government plans to contract $8 billion foreign loans, including $1.8bn through international commercial bonds and Islamic Sukuk, during 2016-17. In the budget documents submitted to parliament, the finance ministry has estimated Rs1.2bn US assistance for public sector development projects next year, compared with Rs1.8bn during the outgoing financial year. In addition, the authorities do not expect any assistance under the Kerry-Lugar programme, which contributed Rs304 million ... Read More »

Debt will Choke Pakistan

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  (Ayaz Amir): We have taken on debt and continue to take on more so recklessly that it is now getting to be beyond our power to service. The old legend used to be that we spent most of our money on defense. We still spend a whopping amount on that – more than we can afford – but debt payments as a portion of our annual budget now far exceed expenditure on defense. This is what comes from living ... Read More »

Beyond GDP – is it time to rethink the way we measure growth?

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(By Ross Chainey) Is our love affair with GDP coming to an end? If you were following this year’s Annual Meeting in Davos, you’d be forgiven for thinking that this is indeed the case. In three separate sessions, two giants of the financial world and one leading academic were all in agreement: gross domestic product – the estimate of the total value of goods and services a country produces – is up for review. Nobel Prize winning economist Joseph Stiglitz, ... Read More »