Crash Course on Debt crisis in the global south, and radical solutions:

#5 Arrested development and austerity: Avoiding the debt trap — with Daniel Munevar, María José Romero

Since March 2020, 80 IMF lending arrangements have been approved. These arrangements arise in an era of historical global debt levels. The world is witnessing an insufficient and inadequate multilateral response to the Covid-19 pandemic, which will lock a large number of countries in a decade-long crisis of debt and austerity.

What are the effects of growing debt piles for the public heath care sector in the Global South?
How can we prevent that IMF austerity measures will arrest development efforts in the next decade?
Which institutional changes are needed at the level of International Financial Institutions to avoid policy responses that create new debt traps?

About the series

Speakers:

Daniel Munevar

Eurodad

Daniel is a Senior Policy and Advocacy Officer supporting Eurodad's work on debt justice. He is interested in the analysis of the links between debt sustainability and the 2030 Agenda. Before joining Eurodad in 2020, Daniel worked for the United Nations Conference on Trade and Development (UNCTAD) and advising the Ministries of Finance of Colombia and Greece on debt related issues. Daniel has a Masters degree in Public Policy from the University of Texas in Austin. He speaks Spanish, English and a bit of Swedish.

María José Romero

Eurodad

María José is Policy and Advocacy Manager for Eurodad's work on publicly-backed private finance and Development Finance Institutions (DFIs). Her role involves research and analysis, advocacy and monitoring policy developments. She joined Eurodad in 2012 and before that she worked at the secretariat of the Latin American Network on Debt, Development and Rights (LATINDADD), based in Peru, on tax justice and development finance. While in Uruguay, her home country, she was for five years Coordinator of the IFIs Latin American Monitor project at the Third World Institute (ITeM), where her main roles were networking and policy monitoring at a regional and global level on IFI-related issues and development finance. She is currently a PhD candidate in Development Economics at SOAS, University of London, with a research project on the global promotion of public-private partnerships in health and education.

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About this series:

Crash Course on Debt crisis in the global south, and radical solutions

In this series, we discuss the field of debt crises in the ‘developing world’, and the different aspects that determine the subordinate economic and financial position of the Global South and why this matters. Has anything changed since the 1980s debt crises when a global movement called for a debt jubilee? What are the prospects for change? And how can these kinds of debt crises be prevented in future?

The indebtedness of developing countries had reached alarming levels before the Covid-19 crisis. A wall of money, managed by investment funds seeking profits across the planet, had an endless appetite for investments in debt from the Global South. Once the panic hit capital markets in March 2020, financial flows to the Global South suddenly stopped. The drop in financial flows to developing countries was faster and larger than at any crisis seen before. Since May, money has started to flow back, leaving the Global South with even less means for coping with the consequences of the Covid-19 crisis.

This disproportionate mood swing of capital markets is a perfect illustration of the difficult position developing countries find themselves in when it comes to today’s financialised global economy. In this Crash Course series, we take a look at the different aspects that determine the subordinate economic and financial position of the Global South and why this matters. We will discuss the different mechanisms that produce unequal economic relations, and also the possible solutions for tackling the root causes of these inequalities.

In the 1980s we saw debt crises in many parts of the Global South. This was followed by ‘Structural Adjustment Programmes’ set by the World Bank and the International Monetary Fund (IMF): indebted countries had to pursue austerity policies, privatise state enterprises and liberalise their economies.

In the 1990s, global financial markets were further liberalised, creating opportunities for speculative funds to take advantage. This resulted in new debt crises in regions like East Asia. More recently we have also seen the controversial handling of the Greek debt crisis and the severe adjustment package imposed upon Greece, with the consequences that followed from it.

The Quantitative Easing (QE) programmes of central banks in the Global North injected trillions of dollars into the financial system after the global financial crisis of 2007, paving the way for another round of potential debt crises today. The surplus of capital and low interest rates in developed economies led to a rise in capital flows to developing countries. Then Covid-19 came along. Again we saw an unprecedented increase in money being injected into the financial system by central banks in the Global North. This rising tide of capital flows has the potential to result in a new period of ‘lost decades’, provoked by debt crises.

In this Crash Course series, we discuss the field of debt crises in the ‘developing world’. Has anything changed since the 1980s debt crises when a global movement called for a debt jubilee? What are the prospects for change? And how can these kinds of debt crises be prevented in future?

Webinars:

Oct 08 2020

Debt, Dependence and Development in Historical Perspective — with Andrew M. Fischer

Oct 22 2020

Dependency Theory and Uneven Development — with Ingrid Harvold Kvangraven

Nov 05 2020

What is Subordinate Financialization? — with Ewa Karwowski

Nov 19 2020

Confronting Debt in the Global South — with Dominic Brown

Dec 15 2020

Arrested development and austerity: Avoiding the debt trap — with Daniel Munevar, María José Romero