Debt relief: Who should foot the bill?

Business Daily

BBC

News, Business

4.4 • 796 Ratings

🗓️ 18 February 2022

⏱️ 17 minutes

🔗️ Recording | iTunes | RSS

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Summary

There’s a credit crunch facing dozens of the world's poorest countries: billions of dollars are now owed and some countries simply won't manage the repayments. So who should foot the bill? We speak with Sri Lankan businessman, Indika Merenchige, who imports vehicles in to Sri Lanka – but it’s not business as usual when your government has defaulted with one of the world’s most influential creditors: China.

Meanwhile, the percentage some African countries are now paying just to service loan repayments has become alarmingly high. Jan Friederich is an African specialist at the Ratings Agency Fitch and speaks with us from Hong Kong. Plus, saying there’s no crisis on the horizon is Sonja Gibbs, the managing director and head of global policy initiatives at the Institute of International Finance, a trade group for the global financial industry. And it is when middle income countries like Turkey default on debt that really worries banks, says Harvard economist Ken Rogoff. Finally, Tim Jones represents the Jubilee Campaign, a non-profit organisation campaigning for global debt relief, thinks there might be a plan for widespread debt relief:

(Photo: A man holds banknotes of the Turkish lira. Credit: Berkcan Zengi/Getty Images)

Transcript

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0:00.0	Hi there. My name's Ed Butler. Welcome to Business Daily from the BBC. Today, the credit crunch
0:08.2	facing dozens of the world's poorest countries. We are in completely uncharted territory. How do
0:15.7	indebted governments handle these debt levels? How do they manage their debt? How do they continue to service
0:22.3	it if borrowing costs rise? Billions are now owed and some countries simply won't manage the
0:28.1	repayments we're told. So who should foot the bill? The lenders are just as responsible for these
0:34.9	crises as the borrowers. The loans that have actually been given have been at very high interest rates.
0:41.2	That level of interest was never payable.
0:44.8	Never a borrower nor a lender be. Business Daily from the BBC.
0:59.4	The sound of a busy market in Colombo in Sri Lanka.
1:02.1	Traders hunting for bargains.
1:06.9	But the bargains are getting harder to find.
1:10.6	Imports of basic staples like cooking gas, fertilizers, even some basic food staples,
1:13.1	have all been hit by a debt crisis. Foreign currency is in short supply and by some estimates
1:19.0	the government's reserves are just a few weeks from running dry. Indica Merensiga is an importer
1:25.3	in the capital. 2020 March, the temporary suspend all imports, about 1,700 items.
1:32.7	Now, already nearly two years, they banned vehicle imports.
1:36.9	Because of the foreign exchange matter, essential items also, they can't import recently.
1:43.4	And the banks also getting so many problems with
1:46.7	foreign exchange some medicines they have problems some exporting things and freight are very expensive
1:54.3	like that but they can manage that enough medicine in sri Lanka how much pain is there? I mean, I'm seeing figures that food inflation in Sri Lanka has hit
2:05.5	25% already in the last month. I mean, that's very important to a lot of poor Sri Lankans.
2:13.0	This could get very critical, couldn't it, if the inflation isn't kept in check?
	...

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