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2. How to deal with the current debt crisis of developing countries?
- Author:
- Jürgen K. Zattler
- Publication Date:
- 01-2025
- Content Type:
- Working Paper
- Institution:
- German Institute of Development and Sustainability (IDOS)
- Abstract:
- Many countries are still struggling with high and rising debt levels. The economic impact of the pandemic, as well as some longer-term structural factors, explain this situation. The key problem is the high level of debt service relative to government revenues, which makes it difficult to address growing development, social and climate challenges. As this is a particular problem for low-income countries (LICs) and lower-middle-income countries (LMICs), the focus should be on these countries. But even within this group, the situation is not uniform. A differentiated approach with different components is therefore needed, depending on countries’ individual situations and their own priorities and choices. There have been many contributions to this debate and proposals on how to address the current problems. This paper builds on some of those contributions presenting a practical and coherent approach to address the current debt crisis which focuses as far as possible on incentives for debtor countries and private creditors. Importantly, a distinction should be made between countries with high debt levels that are at risk of debt distress and those with liquidity problems. Therefore, debt sustainability assessments (DSAs) are needed to decide which countries (a) are not in debt distress, (b) have an insolvency problem, and (c) have a liquidity problem. The International Monetary Fund (IMF) and World Bank should be asked to classify all LICs and LMICs accordingly, based on updated DSAs, using a prudent approach with conservative projections. These DSAs must emphasise debt service indicators. For countries with liquidity problems, they need to identify those countries where the problem is of a longer-term nature, with a risk that the liquidity squeeze will turn into acute debt distress. All LICs and LMICs facing insolvency or liquidity problems should be offered a moratorium similar to the Debt Service Suspension Initiative (DSSI) to give them breathing space (of 2-3 years). The expectation is that this would help countries with liquidity problems to maintain basic social and economic services until market conditions improve or debt relief is implemented. In cases where debt service remains high after the moratorium expires, the country would be expected to request debt relief. Countries at risk of default would be expected to use the period of the moratorium to engage promptly in restructuring discussions and to prepare negotiations with creditors on a debt relief programme. The IMF would make its resources conditional on a suspension of debt service payments. The question is whether private creditors, including sovereign bondholders, should be required to participate. It is suggested that a distinction be made between two categories of countries. For countries at risk of insolvency, including those with longer-term liquidity problems, the moratorium should be conditional on private participation on comparable terms, as their creditworthiness is likely to be affected anyway. In contrast, with countries facing short-term liquidity problems the approach should be more flexible. While pressure on private creditors to join a standstill should be maximised, this should be complemented by strong incentives. Countries with unsustainable debt would request treatment under a reformed G20 Common Framework for Debt Treatment (CF) with the option of a more comprehensive debt relief arrangement (“CF+”), including the following enhanced or new components: • At the beginning of the process, countries would have to present a “Just Green Transition Programme” (JGTP), monitored by the IMF and the World Bank. • The CF+ would be accompanied by more comprehensive debt relief, thus creating more fiscal space to allow the country to finance transformational and social investments. Debt service after rescheduling should be based on DSAs, which pay greater attention to Sustainable Development Goal (SDG) investments and countries’ particular circumstances, leaving countries with substantial room to absorb shocks. The objective would be to limit the debt burden to external creditors as a share of revenue after rescheduling to around 10-15 per cent. • For those countries where a large part of the debt service will be due to multilateral creditors, the involvement of multilateral institutions should be considered. This should be the case for those multilateral creditors which are not willing, or able, to provide positive net flows at highly concessional terms. • The issuance of “Brady-like” bonds could be considered for specific country cases. The issuance of Brady-like bonds could be an incentive to maximise private creditor participation in exchanging old debt for new bonds with a significant discount or “haircut”.
- Topic:
- Debt, Development, Sustainability, and COVID-19
- Political Geography:
- Global Focus
3. The end of the energy price crisis must not mean the end of the energy transition
- Author:
- Valérie Plagnol
- Publication Date:
- 04-2025
- Content Type:
- Working Paper
- Institution:
- Robert Schuman Foundation (RSF)
- Abstract:
- In many respects, Europe has recently experienced a rude awakening, albeit a salutary one. Barely recovered from the Covid pandemic, it has had to contend with the most serious energy supply crisis since the oil shocks of the 1970s, due to Russia's invasion of Ukraine and the subsequent disruption of Russian gas supplies, particularly via the Nord Stream pipelines. After electricity prices rose to extreme levels, their recent decline in Europe is particularly welcome. But this respite is far from enough. On the one hand, electricity prices are still higher than before the crisis and, on the other hand, they remain almost twice as high as those of our main trading partners, weighing on household purchasing power and business competitiveness. Such constraints, combined with rising geostrategic and trade tensions and the need to strengthen our common defence, have led some segments of European public opinion, including some economic actors, to question the efforts undertaken in the energy and climate transition. However, there can be no question of abandoning the path of energy transition, as the current tensions confirm the necessity and legitimacy of this approach. - This is, of course, about our climate future: numerous and consistent studies show that doing nothing rather than taking action will cost our economies and ourselves much more. - Geopolitical and economic tensions are accentuating the convergence between these imperatives and the need to strengthen our sovereignty, through diversification of supply sources and greater control of production cycles on our own soil. - The growing electrification of uses is generating a new industrial revolution – particularly in the mobility and artificial intelligence sectors – creating an economic and ecological dynamic that Europe is in a position to capture. Combining these imperatives therefore means accelerating the transition to energy and decarbonising our consumption. The current crisis has shown us that massive reliance on natural gas cannot be as stable a transition solution as we had hoped. Rising electricity prices have led to an acceleration of renewable energy projects and installations. More Member States support the development of nuclear power, better integrated into the overall mix and included in the European taxonomy. France, which is committed to renewing its facilities, is at the forefront of these efforts. Finally, strengthening and reorganising our electricity networks, including the development of interconnections, is already at the heart of our industrial strategies.
- Topic:
- Electricity, COVID-19, Energy Crisis, Russia-Ukraine War, and Energy Transition
- Political Geography:
- Europe
4. Recent Global Business Cycles: Characteristics and Implications
- Author:
- Sang-Ha Yoon
- Publication Date:
- 02-2025
- Content Type:
- Policy Brief
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- The analysis of economic patterns from late 1999 to 2023 reveals significant changes in how the world's economies connect with each other. Our research shows a clear trend toward more varied economic patterns, with regional and country-specific factors becoming more important than global influences. This shift became particularly noticeable after the COVID-19 pandemic, where we saw global factors having less influence on national economies than before. The study's findings have important implications for economic policy making. Countries need to develop flexible approaches that can adapt to both global and regional economic changes. At the same time, they must strengthen regional economic cooperation while maintaining domestic economic stability. The findings also highlight the importance of building better systems for responding to economic crises, while considering both regional and global factors in economic policy decisions. These changes suggest that the global economy is becoming more complex, with different regions and countries showing more independent movement than before. As this trend continues, the ability to balance global, regional, and domestic economic relationships will become increasingly important for maintaining economic stability and promoting growth.
- Topic:
- Economics, Business, Economic Growth, and COVID-19
- Political Geography:
- Global Focus
5. Gender-Based Violence and Sources of Support in the Middle East and North Africa (2023-2024)
- Author:
- Arab Barometer
- Publication Date:
- 03-2025
- Content Type:
- Special Report
- Institution:
- Arab Barometer
- Abstract:
- According to reports from the World Bank, 40 percent of women across the Middle East and North Africa (MENA) have experienced violence from their partner at least once in their lifetime. A report from the OECD found that violence against women in MENA increased during the COVID-19 pandemic. These findings are in-line with the findings from the most recent Arab Barometer 2023-2024 survey, in which a plurality of citizens from nearly every country perceive that violence against women has increased in the past year. Governments across the region are taking actions to combat the rise in violence but more remains to be done. Despite the dire circumstances, there are points of hope in Arab Barometer’s findings as well. In particular, nearly all citizens can point to at least one source of support for women that face abuse. While citizens are highly unlikely to say a woman facing abuse cannot find support, the most commonly cited sources of support are familial rather than institutional. Specifically, support from male family members is seen as far more readily available than support from hospitals or clinics. Relying on family rather than institutions for support is complicated. At best, a lack of institutional support may indicate that citizens do not view the government as particularly invested in supporting women facing gender-based violence. Increasing institutionalized support through funding and outreach with local organizations or healthcare facilities could provide more security for abused women.
- Topic:
- Public Opinion, Gender Based Violence, Survey, COVID-19, and Gender Equality
- Political Geography:
- Middle East and North Africa
6. Why Did Inflation Rise and Fall So Rapidly? Lessons from the Korean War
- Author:
- Joseph Gagnon and Asher Rose
- Publication Date:
- 01-2025
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- The speed of both the rise and fall of US inflation in 2021–23 took many economists by surprise. This paper shows that the rise of COVID era inflation reflects three independent shocks: a plethora of pandemic-related shifts in demand patterns and supply disruptions; the largest commodity price surge in 40 years caused by the Ukraine war; and strong monetary and fiscal responses to the pandemic, which kept labor markets tight. This paper documents the transmission of these shocks through the main components of private consumption: durable goods, nondurable goods, and services. The rapid fall of inflation reflects the credibility of the Federal Reserve’s commitment to low inflation, something that was not apparent during the inflationary shocks of the 1970s but that was important during the Korean War inflation of 1950–51. Another similarity with the Korean War episode is the temporary surge in demand for durable goods.
- Topic:
- Economy, Inflation, Korean War, COVID-19, and Goods and Services
- Political Geography:
- Asia and South Korea
7. The Role of Long Histories of “Lived Experience” in the COVID-Era Inflationary Surge
- Author:
- Joseph E. Gagnon and Steven Kamin
- Publication Date:
- 04-2025
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- A rough consensus has evolved around the causes of the COVID-era inflationary spike: the disruption in supply chains; the shift in demand from services to goods; the surge in commodity prices that followed Russia’s invasion of Ukraine; and the pandemic fiscal stimulus programs. In this paper, we highlight an additional factor influencing the incidence of pandemic inflation across countries—their long histories of “lived experience” with inflation. We show that more than half of the variation in inflation across countries during the 2020–23 period can be explained by their earlier levels of inflation. Even controlling for inflation in the 2016–19 period, countries with higher inflation in the 2000–2015 period had higher COVID-era inflation, and the effect of long-lagged inflation is both economically and statistically significant. These long histories of lived experience dominated other policy measures to control inflation, including inflation targets and central bank independence. The influence of long-lagged inflation history appears to be greatest during periods of heightened volatility; it was less important in explaining the cross-country pattern of inflation during the more tranquil period immediately preceding the pandemic.
- Topic:
- Economy, Inflation, COVID-19, and Supply Chains
- Political Geography:
- Global Focus
8. Lonely in the Crowd: Plugged or Remote?
- Author:
- Tobia Zevi
- Publication Date:
- 05-2025
- Content Type:
- Special Report
- Institution:
- Italian Institute for International Political Studies (ISPI)
- Abstract:
- The Covid-19 pandemic forced cities to shut down and citizens to stay home, disrupting economic activity and social life. The crisis pushed companies to adopt remote work, transforming it from a niche practice to a widespread norm, altering the balance between work and personal life. This shift created inequalities across sectors and influenced the ability of "global cities" to attract talent in a globalized labor market. Now, as the pandemic has receded, many companies are reversing course. This Report explores how remote work has impacted cities and citizens, from mobility to urban planning. How can remote work reshape global cities? What strategies are available to local authorities? Is remote work still the future?
- Topic:
- Cities, COVID-19, Labor Market, Digitalization, and Remote Work
- Political Geography:
- Europe and Global Focus
9. Norway’s vaccine diplomacy during Covid-19
- Author:
- Emma Sandvik Ling
- Publication Date:
- 07-2025
- Content Type:
- Working Paper
- Institution:
- Danish Institute for International Studies (DIIS)
- Abstract:
- How did Nordic countries manage the tensions and ethical dilemmas of national health security and international solidarity during the Covid-19 vaccine response? This DIIS working paper examines Norway’s Covid-19 vaccine procurement and distribution strategy within the framework of the SCANVAX project on Nordic vaccine diplomacy. The study analyses how Norway worked to procure Covid-19 vaccines to cover the needs of the Norwegian people as well as how Norway engaged in the global pandemic response and efforts to ensure global vaccine distribution. The working paper also examines how tensions between national health security and international solidarity was navigated in public discourse during the pandemic. The case demonstrates how a small non-EU state managed pandemic responses through complex diplomatic arrangements while balancing domestic needs with global solidarity commitments. The working paper is part of the project Strategic solidarity: Scandinavian countries' Covid-19 vaccine diplomacy (SCANVAX) that explores the significant tension between national, regional and international vaccine solidarity during Covid-19 and asks how the dominant policy goal of securing vaccines in the interest of national health security was intertwined with global health security and broader foreign policy objectives, whether related to international solidarity, diplomatic influence, or geopolitical interests. SCANVAX is financed by NordForsk under the Nordic Council of Ministers and implemented by a consortium of researchers from the University of Oslo, Lund University and DIIS.
- Topic:
- Foreign Policy, Diplomacy, COVID-19, and Vaccine Diplomacy
- Political Geography:
- Europe and Norway
10. Denmark’s vaccine diplomacy during Covid-19
- Author:
- Adam Moe Fejerskov and David Lyndorff Paris
- Publication Date:
- 07-2025
- Content Type:
- Working Paper
- Institution:
- Danish Institute for International Studies (DIIS)
- Abstract:
- How did Nordic countries manage the tensions and ethical dilemmas of national health security and international solidarity during the Covid-19 vaccine response? This DIIS working paper examines Denmark's Covid-19 vaccine procurement and distribution strategy within the framework of the SCANVAX project on Nordic vaccine diplomacy. The Danish case shows the complexities of how a small European state managed pandemic responses through multilateral frameworks while pursuing national interests, highlighting persistent tensions between vaccine nationalism and global health solidarity during health crises. Denmark's experience illustrates the multifaceted realities of vaccine diplomacy, where even countries with strong international development commitments prioritise domestic health security when faced with uncertain vaccine supplies, while simultaneously using surplus vaccines as tools for broader foreign policy objectives. The working paper is part of the project Strategic solidarity: Scandinavian countries' Covid-19 vaccine diplomacy (SCANVAX) that explores the significant tension between national, regional and international vaccine solidarity during Covid-19 and asks how the dominant policy goal of securing vaccines in the interest of national health security was intertwined with global health security and broader foreign policy objectives, whether related to international solidarity, diplomatic influence, or geopolitical interests. SCANVAX is financed by NordForsk under the Nordic Council of Ministers and implemented by a consortium of researchers from the University of Oslo, Lund University and DIIS.
- Topic:
- Foreign Policy, Vaccine, COVID-19, Development Policy, and Vaccine Diplomacy
- Political Geography:
- Europe and Denmark