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The Upstream Journal

A magazine on social justice since 1975

Posts Tagged / debt

  • Aug 03 / 2014
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Journal

Aid and debt follow natural disaster

Marcos

Bust of Ferdinand Marcos, the dictator who embezzled $10 billion. International creditors still collect payments from the people of the Philippines because of their loans to his corrupt regime.

After super typhoon Haiyan hit the Philippines, nations and charities were praised for their quick response. The United Kingdom offered more than $110 million in grants and humanitarian assistance, and the US promised $90.5 million.  They did not offer to cancel debt payments.

In 2014 it is estimated that the Philippines will have to spend $8.8 billion on debt service, almost as much as the $8.99 billion it will spend on infrastructure projects and reconstruction.

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  • May 13 / 2014
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Journal

Jamaica – Skyrocketing debt, poverty and even more austerity

Waving Jamaican Flag (Photograph by- John D. Mcdonald)

Waving Jamican Flag (Photograph by- John D. Mcdonald)

With public debt at 143% of GDP, Jamaica is one of the most highly indebted countries in the world. Jamaica has the third highest debt-to-GDP ratio, after Japan and Greece. Decades of low growth and high debt have led to persistently high poverty and unemployment as well as the departure of many Jamaicans for better opportunities abroad.

The IMF recently approved a 4-year loan agreement with Jamaica under which Jamaica will receive up to US$ 932 million. This will unlock additional funding from the World Bank and the Inter-American Development Bank of around $510 million each. Canada has promised to contribute to program financing by supplying technical and bilateral assistance. The IMF agreement aims to put Jamaica’s public debt on the path to dropping to 96% of GDP by the end of March 2020. Continue Reading

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  • Nov 01 / 2009
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Journal

Financial Vultures

vulture on a sign

In 1979, Romania loaned Zambia $15 million to put toward agricultural machinery and vehicles. By the 1990s due to widespread poverty and devastating health conditions, Zambia was unable to repay its external debt and started to negotiate for debt cancellation.

During this negotiation, in 1999, a company named Donegal International bought up Zambia’s debt, then valued at $30 million, for $3.3 million. Donegal then sued Zambia for the full amount of the debt, plus interest – a total of $55 million.

Donegal has been called a “vulture fund,” which designates a company that buys up “bad” debt at a discount and then sues for the full amount plus interest. These funds carry out most of their activities through legal action in national courts and usually win.

Donegal International was started in 1997 with the sole purpose of holding and managing the debt purchased by Romania and owned by Zambia. Companies like Donegal International are often set up to pursue a single debt and then are shut down as soon as they win their lawsuit. This technique allows them to be as secretive about their actions as possible, often going unnoticed due to their lack of publicity. Continue Reading

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