Evidence of Need for Moratoria on Servicing Imperialist Debt
"Debt-Service Payments Put Biggest Squeeze on Poor Countries Since 2000" headlines reported following the release of the World Bank Press Release for its 2022 International Debt Report. TML Monthly is posting excerpts from that report with additional comments.
"The [75] poorest countries eligible to borrow from the World Bank's International Development Association (IDA) now spend over a tenth of their export revenues to service their long-term public and publicly guaranteed external debt – the highest proportion since 2000.
"The report highlights rising debt-related risks for all developing economies – low- as well as middle-income economies. At the end of 2021, the external debt of these economies totaled $9 trillion, more than double the amount a decade ago. During the same period, the total external debt of IDA countries, meanwhile, nearly tripled to $1 trillion. Rising interest rates and slowing global growth risk tipping a large number of countries into debt crises. About 60 per cent of the poorest countries are already at high risk of debt distress or already in distress.
"At the end of 2021, IDA-eligible countries' debt-service payments on long-term public and publicly guaranteed external debt totaled $46.2 billion – equivalent to 10.3 per cent of their exports of goods and services and 1.8% of their gross national income (GNI), according to the report. Those percentages were up significantly from 2010, when they stood at 3.2 per cent and 0.7 per cent respectively. In 2022, IDA countries' debt-service payments on their public and publicly guaranteed debt are projected to rise by 35 per cent to more than $62 billion, one of the highest annual increases of the past two decades."
Comment: One-tenth of export gross income lost to debt servicing is an enormous amount for any country let alone a poor one. Imperialist investments into poor countries are usually destined to augment exports and not the internal development of a local self-reliant economy. Imperialists argue that export income can be used to solve social problems and for internal development. Being saddled with enormous debt servicing charges and the continued underdevelopment of the poorest countries belie these claims.
Much of the imperialists' investment money, aside from that invested into enterprises they own, is destined for infrastructure needed by their businesses or the local governments in their service in particular for their military and police forces. The enterprises that the imperialists own and control including mines take out of the targeted country the resources that the imperialists want and demand along with the enormous added-value or profit the working people produce while extracting and possibly refining this material.
The export income for developing countries from the sale abroad of resources and other social product is sabotaged directly with the expropriation of the produced social value as enterprise profit by the imperialist owners, in debt servicing payments to the foreign owners of the debt, and in payment for goods and services they buy from the imperialists. The ox is skinned over and over by the foreign enterprise owners and investors who benefit from direct ownership of the companies they own, from the external debt they hold and from the slavish purchase agreements they have with the imperialist centres in particular for military supplies.
International Development Association
The World Bank created the IDA in 1960 to keep sub-Saharan Africa and others under imperialist control and exploitation. The IDA furthers the control of the World Bank's original lending arm – the International Bank for Reconstruction and Development (IBRD). The IDA now includes 75 countries.[1] The IDA provides loans at low interest called "credit" for projects the U.S. imperialists and their close allies such as the ruling elite in Canada deem worthy, and which serve to solidify their economic control and the global political and military hegemony of U.S. imperialism.
The annual IDA additional moneylending to the 75 poorest countries has increased steadily over the last three years to about $36 billion. This amount although large for such poor countries is but a fraction of the trillions of dollars of global flow of social value from imperialist institutions such as the IMF, other state-controlled financial enterprises and the dominant privately-held and controlled banks and other financial, commercial and industrial companies.
An issue to remember and emphasize is that the imperialist era is marked by the flow of social value around the world in relentless pursuit of maximum profit for its owners and to ensure the continued global economic, political and military control by the most powerful private interests centred in the imperialist heartlands. The aim of the global flow of social value is not the mutual development of all humanity for the well-being of people and humanization of the social and natural environment but the continued domination of the world by the most powerful imperialists to serve the private interests of the ruling elite.
The World Bank Group President David Malpass is quoted in the press release saying, "The debt crisis facing developing countries has intensified." Of course he does not identify the World Bank as part of the problem. Nor does he expose the root of the problem being imperialist control and the aim and obsession for maximum private profit at the expense of humanity and Mother Earth.
According to the World Bank, debt crises arise from lack of "debt transparency." The press release reads, "The rising debt vulnerabilities underscore the urgent need to improve debt transparency and provide more complete debt information to strengthen countries' ability to manage debt risks and use resources efficiently for sustainable development."
Indermit Gill, Senior Vice President and Chief Economist of the World Bank Group, has the gall to put the blame on the poor countries that "sleepwalk into a debt crisis" because of "poor debt transparency." How about something a little more concrete to address the situation Mr. Gill such as a moratorium on debt servicing and a change in the aim of the economic system away from the expropriation of maximum private profit to one of using the social value people produce for the well-being of all and mutual development of their economies so that the people by putting the economy under their control can humanize the social and natural environment.
Mr. Gill would have none of it and instead as an answer to the crisis he suggests: "Complete, transparent debt data improves debt management. It makes debt sustainability analyses more reliable. And it makes debt restructurings easier to implement, so that countries can return quickly to economic stability and growth. It is not in any creditor's long-term interest to keep public debt hidden from the public." The World Bank President wants "economic stability and growth" to serve the imperialist creditors.
An immediate question arises as to when Africa for example ever experienced "economic stability and growth" to which it can return. The U.S. and old colonial powers have savagely attacked, exploited and plundered the human and natural resources of Africa for centuries beginning with the inhuman slave trade.
No, the World Bank and ruling elite do not want to hear or deal with the concrete conditions and present real solutions that would open a path forward such as a moratorium on debt servicing. Instead they pat themselves on the back and create illusions that the very economic system at the root of the recurring crises, and the ruling elite in control will deal with the problems. Not going to happen! Not without a determined organized fight of the working people themselves to force reforms that serve the people such as a moratorium on servicing imperialist debt and increased investments in social programs, which would open a path forward to a new aim and direction for the economy.
The World Bank writes in praise of itself and for the continuing domination and exploitation of the imperialist elite: "The new International Debt Report reflects an advance in debt transparency. It draws from the World Bank's International Debt Statistics database—the most comprehensive source of comparable cross-country information on the external debt of low- and middle-income countries. It improves on the earlier International Debt Statistics reports by adding substantive analysis and expanding both the breadth and specificity of the data in it." Blah, blah, blah. No wonder the people hold bankers in such contempt.
But facts keep coming back to haunt the bluffers and illusionists. The World Bank admits: "In 2022, global growth is slowing sharply. Amid one of the most internationally synchronous episodes of monetary and fiscal policy tightening the world has seen in 50 years, the risk of a global recession next year has been rising. Currency depreciations have made matters worse for many developing countries whose debt is denominated in U.S. dollars."
"Over the past decade, the composition of debt owed by IDA countries has changed significantly. The share of external debt owed to private creditors has increased sharply. At the end of 2021, low- and middle-income economies owed 61 per cent of their public and publicly guaranteed debt to private creditors – an increase of 15 percentage points from 2010. IDA-eligible countries owed 21 per cent of their external debt to private creditors by the end of last year, a 16-point increase from 2010."
Throughout the imperialist world, the richest billionaires and their hirelings more and more directly control not only the economy but the political and governing institutions including the police and military powers. Everything is being privatized and put under the direct control of the billionaires. For a moratorium on debt servicing to become a reality requires the determined collective effort of the organized working people. A debt servicing moratorium challenges the authority and aim of the imperialists in control. A debt moratorium victory would be a step forward for the people's forces in the epic battle with imperialism.
This article was published in
Volume 53 Number 11 - November 2023
Article Link:
https://cpcml.ca/Tmlm2023/Articles/M530115.HTM
Website: www.cpcml.ca Email: editor@cpcml.ca