Zambian sunlight could disperse Chinese debt fog 18 Aug 2021 The African state’s new leader, Hakainde Hichilema, has to forge a deal with creditors after last year’s default. Getting China to the table won’t be easy. Lifting Beijing’s veil of secrecy by revealing Lusaka’s loans would remove the biggest barrier, and set a good precedent.
Billion-dollar whales fill 1MDB’s wide net 28 Jul 2021 Malaysia has clawed back funds almost equal to the amount the U.S. says was misappropriated from the sovereign fund. After chasing down Goldman Sachs, it has plenty of targets left to cover $5 bln of unfunded dues. Infamous 1MDB’s shortfall could soon become a surplus.
South Africa has no money to throw at its problems 15 Jul 2021 The Rainbow Nation is suffering its worst civil unrest since the end of apartheid in 1994. The ruling ANC’s usual response to cracks in the social fabric is to fill them with new subsidies. With debt at 80% of GDP and rising fast, that has a limited shelf-life.
Why 2021 is a sweet spot for economic policymakers 29 Jun 2021 Economies are rebounding, low interest rates mean debt service costs are at historical troughs, and finance ministers and central bankers are pulling in the same direction. But “Pandexit”, as a new BIS report calls it, will make officials’ jobs harder again after this year.
EU bond ban is smarter way to police errant banks 16 Jun 2021 The bloc froze 10 lenders out of its first recovery bond sale because of past market-rigging, the FT reported. The direct hit for JPMorgan and others is small. But they can only rejoin the fold by proving they’ve changed. That’s a keener incentive to stay clean than fines.
EU bonds will take shine off Germany’s over time 15 Jun 2021 Investors flocked to buy the maiden issue of the bloc’s 800 bln euro joint funding programme. But the yield is higher than Berlin’s, implying it’s not yet Europe’s safest asset. Closing the gap requires more liquidity and a sustained political commitment. Both seem likely.
D.C. summer heat set to inflame new debt fight 24 May 2021 Lawmakers have to set a ceiling on federal borrowing after July 31, following a period with the limit suspended. August also marks 10 years since S&P cut the U.S. credit rating. With debt now $28 trln, $6 trln more than the last explicit cap, standoff memories may flood back.
UK takes slow road to Scotland breakaway risk 10 May 2021 Pro-secession parties increased their majority in Scottish elections, while Boris Johnson’s Conservatives cemented their position in England. Yet even if a new referendum takes place, the outcome is far from certain. The breakup threat will take time to show up in asset prices.
The Exchange: ECB President Christine Lagarde 14 Apr 2021 What role does the central bank play in combatting climate change? How will it confront the emergence of digital currencies? What if the U.S. economy charges ahead while Europe languishes? Lagarde takes on these questions and more in an exclusive discussion with Breakingviews.
Guest view: Making the most of a new SDR ration 7 Apr 2021 As advanced economies emerge from the pandemic downturn more quickly than poorer ones, Kevin Gallagher and Jose Antonio Ocampo call for a new allocation of Special Drawing Rights and suggest ways that this IMF quasi-currency can be channelled to the countries in direst need.
Russia has defences against U.S. sabre-rattling 25 Mar 2021 Given the U.S. president reckons his Russian counterpart is a “killer”, new sanctions on Russian government debt are possible. Jumpy prices forced Moscow to cancel a bond auction. But with a trade surplus and low external debt, Kremlin finances will hold up.
Guest view: Consider a debt for vaccines program 9 Mar 2021 Such plans may help reduce currency mismatches in jab distribution, reduce the need for “new money” and avoid overloading balance sheets with unsustainable pre-existing debt. Epidemiologist Cristina Valencia and banker William Rhodes argue for piloting the idea in Latin America.
Rare lender deal underscores India’s credit reset 4 Mar 2021 Creditors of real estate lender Altico voted to sell its assets to a unit of New York-listed Ares. The out-of-court resolution is a sign of maturity in a market where the regulator is too often forced to intervene. Foreign distressed debt investors have other things to cheer too.
UK recovery may not reflect its vaccine head start 3 Mar 2021 Rishi Sunak’s budget showed Britain’s rapid inoculations are aiding its economy. But while the finance minister will keep paying Britons’ wages until September, his longer-term stimulus is more meagre. A lot rests on businesses driving the recovery, even as he taxes them more.
If Joe Biden doesn’t stoke inflation, no one can 9 Feb 2021 Former Treasury boss Larry Summers is among those who fear the U.S president’s $1.9 trln stimulus plan is too much of a good thing. Price rises may pick up once all of Biden’s policies kick in. There’s a case for more targeted spending now, followed by a focus on infrastructure.
Biden’s relief package comes with political price 1 Feb 2021 Democrats want to go it alone on a $1.9 trln economic rescue. With a workaround they can probably pass some measures, like direct payments to households, even if Republicans protest. Minimum-wage hikes, though, may be out of reach. And the effect will be more ugly partisanship.
Washington takes low road back to Latin America 1 Feb 2021 Days before Donald Trump left office, a U.S. development bank agreed to help Ecuador repay some $3.5 bln of debt in exchange for locking China out of its telecom network. Reviving relationships in the region makes economic sense, but it’ll take more than chasing Beijing away.
Economic fixes can make 2024 election less fraught 20 Jan 2021 Joe Biden has many goals, but one ought to be making the next election smoother than the last. An inequitable job market keeps voters from polls while gerrymandering helps keep wealth in areas that already have it. Electoral and economic systems are linked; both need an overhaul.
Federal debt monster lurks for Biden, Yellen & Co 19 Jan 2021 The U.S. president-elect’s pick to lead the Treasury says going big with coronavirus relief is smart for now. But debt at 100% of GDP and counting will inevitably become a millstone. Big-ticket agenda items, from higher taxes to lower defense spending, can’t be avoided for long.
Argentina borrows from the Elliott playbook 8 Jan 2021 The country used an obscure but widespread legal clause to argue for dismissing part of a lawsuit over GDP-linked warrants. Paul Singer’s fund once helped push Argentina to default with such wordplay. If Buenos Aires' tactics pay off, other creditors will have to pay attention.