Government Debt

Biden budget misses opportunity to aim low

9 Mar 2023

Seasoned negotiators often set a lofty target, then offer small concessions. The US president’s budget follows that strategy. But Republicans won’t play ball. A more modest plan – including spending cuts – would have been harder to reject out of hand, and saved valuable time.

Africa debt stalemate will reverberate across West

27 Feb 2023

More than half the countries in sub-Saharan Africa may default on loans worth over $300 bln. Those which sought IMF relief are awaiting the resolution of a standoff between Western lenders and China. The crisis will leave debtors and creditors worse off and fuel migration.

Rolling EU debt would boost investment and markets

21 Feb 2023

European Union bonds to fund 900 bln euros in pandemic aid have cheered investors. The bloc needs ongoing debt sales to buoy traders’ confidence, invest cross-border and challenge the U.S. dollar. Separating borrowing plans from spending rows could make the politics possible.

Search for new World Bank boss flows from Barbados

20 Feb 2023

The multilateral lender needs a new president now that David Malpass is quitting early. Barbadian Prime Minister Mia Mottley’s green finance strategy offers a way to channel more lending to developing countries. Though the U.S. will have the final say, a shift is overdue.

India signs up banks for a pre-election campaign

2 Feb 2023

New Delhi is topping up a loan backstop scheme for small firms. The plan will drive $24 bln of funds to a bruised set of borrowers that are also a key voting bloc in polls next year. The plan may cause banks some pain, and it risks entrenching structural economic snarls.

Euro zone can afford to keep fiscal taps running

31 Jan 2023

The bloc’s governments pumped up spending by 3.75% of GDP over the past two years to cushion the blow of Covid-19 and higher energy prices. Now they are closing the spigots. That’s a mistake. Manageable debt costs leave room to support growth – and help the ECB fight inflation.

Bank of Japan has learnt danger of half-measures

18 Jan 2023

The central bank’s decision to stay put on interest rates saw the yen soften and hurt 10-year bond yields. Last month’s surprise tweak to bond trading bands failed to impress traders. Inaction may be painful and expensive, but muddled economic signals make it understandable.

EU’s frozen Russian assets plan is best put on ice

12 Jan 2023

The European Commission wants to use nearly $200 bln of Russian assets to help finance the reconstruction of Ukraine. Germany seems to like the idea. But it is legally shaky, financially marginal, and politically fraught. For now Europe and its allies must shoulder the task.

Guest view: Debt fixes can help rebuild Ukraine

11 Jan 2023

Even as Russia’s invasion ravages the country, policymakers need to start planning for reconstruction, write William Rhodes and Stuart Mackintosh. States and private creditors will chip in. U.S.-backed Brady bonds, which helped ease past crises, can provide further relief.

Macron’s fiscal torpor will weaken France

29 Dec 2022

The French president is running the only big European economy whose public debt, now at 112% of GDP, is still rising. High government spending helped during the crises but is now pushing up bond yields, stifling growth. Budget neglect will also erode Paris’s influence in the EU.

Euro crisis shield is stuck in hedge fund mode

21 Dec 2022

The European Stability Mechanism, set up to help troubled euro countries, aspires to be the bloc’s debt manager. But member states’ distrust of perceived German control and stigma around its aid make this unlikely. Managing old bailout loans is the fund’s best hope.

UK’s new fiscal plan narrowly navigates recession

17 Nov 2022

As the economy shrinks, new finance chief Jeremy Hunt intends to raise taxes and cut spending. The 55 bln pound package goes some way to rebuilding Britain’s cracked credibility with investors. Delaying the pain by a few years could also help his party’s electoral prospects.

UK market watchdogs rely on kindness of foreigners

9 Nov 2022

The Bank of England has intervened in government bond trading twice in less than three years. Both times, selling by overseas funds was partly to blame. British regulators have limited oversight of the $2.4 trln gilts market. Their best hope is help from counterparts elsewhere.

Europe’s pain will be ultimately worth it

31 Oct 2022

The European Union faces a tough period as the energy crisis bites and debt troubles return. But the bloc could have the world’s cheapest and cleanest energy by the mid-2030s and it will probably emerge stronger geopolitically, says Hugo Dixon.

Italy’s new premier starts with a big faux pas

27 Oct 2022

Giorgia Meloni vowed to hike a 2,000 euro cap on cash payments, reversing attempts to boost electronic transactions. That will make it harder to track 100 bln euros of annual untaxed revenue. With debt at 147% of GDP, Italy cannot afford to be complacent on chronic tax evasion.

Italy’s new boss is missing a trick on tax evasion

24 Oct 2022

Public debt at 147% of GDP and a slowing economy limit Prime Minister Giorgia Meloni’s scope to curb an energy crisis and keep spending promises. Tackling endemic tax evasion would give her more fiscal ammunition. Yet promoting the use of cash and tax amnesties will not help.

Delusions of grandeur are root of Britain’s chaos

21 Oct 2022

“Trussonomics” followed hot on the heels of Brexit. Both are symptoms of a country that hasn’t fully come to terms with the loss of its empire, says Hugo Dixon. If the UK now realises it can’t defy the laws of economics and geopolitics, it may emerge wiser albeit weaker.

Trussonomics lights slow-burning Aussie fuse

14 Oct 2022

The disastrous UK mini-budget has sparked a debate Down Under about income tax cuts due in 2024. Prime Minister Anthony Albanese risks a political backlash if he pulls a U-turn, and the treasury does have some wiggle room. But pressure to change course will be hard to extinguish.

Sovereign debt greens yet net-zero pledges darken

13 Oct 2022

Saudi Arabia’s wealth fund is the latest public body to issue securities to fund renewable assets. Strong buyer demand and the chance to flaunt action on climate change explain the boom. Yet national decarbonisation targets remain weak, and green bonds do little to improve them.

How West can mobilise trillions to help save Earth

10 Oct 2022

On top of stopping global warming, rich nations have geopolitical reasons to help the countries in the Global South transition from fossil fuels. America’s call for the World Bank to focus more on global needs like climate change is a step in the right direction, says Hugo Dixon.