Tag: debt

Economic conditions in debt-stricken Sri Lanka improving, IMF says | Debt

IMF says inflation has dropped from 70 percent, economy expanded in the second half of 2023.

The economic situation in debt-stricken Sri Lanka has started to gradually improve following its worst economic crisis two years ago, the International Monetary Fund (IMF) has said.

Inflation has come down from a peak of 70 percent in 2022 to 5.9 percent last month and the country’s economy expanded in the second half of last year following a year and a half of contraction, the IMF said on Thursday.

Sri Lanka’s year-on-year economic expansion in the third quarter of 2023 was 1.6 percent, and in the fourth quarter 4.5 percent, the IMF said.

The economic crisis in early 2022 left Sri Lankans suffering from severe shortages of food, medicine, fuel and power, drawing strident protests that led to the removal of then-President Gotabaya Rajapaksa.

The Indian Ocean island nation declared bankruptcy in April 2022 with more than $83bn in debt – more than half of it to foreign creditors.

Sri Lanka turned to the IMF for help to rescue the economy and secured a bailout package last year.

Under the current four-year bailout programme, the IMF is to disburse $2.9bn in tranches after biannual reviews of whether the country is imposing needed economic reforms.

The country has received two payments so far and also has received promises of debt forgiveness from major creditors like India, Japan and China. The government also is in talks with private creditors.

On Wednesday, the IMF said a team of its officials had reached an agreement with Sri Lankan authorities on the second review of economic reforms.

Once the agreement is approved by the IMF executive board, Sri Lanka would have access to the latest tranche of $337m, for a total so far of about $1bn.

In July 2022, then-Prime Minister Ranil Wickremesinghe was appointed as president.

Since then, he has managed to restore electricity, and shortages of essentials have largely abated. Sri Lanka’s currency has strengthened, and interest rates have fallen to about 10 percent.

However, Wickremesinghe faces public anger over heavy taxes and the high cost of living.

Despite improving economic indicators and an easing of the worst shortages, Sri Lankans have lost buying power due to high taxes and currency devaluation. Unemployment remains high as industries that collapsed at the height of the crisis have not yet returned.

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Fitch Ratings upgrades Qatar to third-highest on back of gas expansion | Oil and Gas News

Revenues from Qatar’s LNG fields will provide budget surpluses until the 2030s, Fitch said.

Fitch Ratings has upgraded Qatar to AA, its third-highest rating, on the back of revenues expected from its expanded gas fields, the agency has said.

Revenues from Qatar’s liquified natural gas (LNG) fields will ensure that the country posts budget surpluses until the 2030s, Fitch said in a release on Wednesday outlining the rating rationale.

The upgrade from AA- “reflects Fitch’s greater confidence that debt to GDP will remain in line with or below the ‘AA’ peer median after falling sharply in recent years,” the agency said.

Fitch expects Qatar’s debt-to-GDP ratio to fall to about 47 percent of gross domestic product (GDP) in 2024 and 45 percent in 2025, from a peak of 85 percent in 2020.

Qatar is already one of the richest countries in the world and boasts one of the highest ratios of GDP per capita. The added revenue boost will ensure that its external balance sheet will strengthen from an already strong level, Fitch said.

However, Fitch warned that the continuing war in Gaza posed a risk to Qatar’s rating even though it had so far not been directly affected. Should a sharp escalation in regional tensions lead to capital flight from banks, for instance, or cause prolonged disruptions of Qatar’s hydrocarbon and transport sectors, that would affect the latest rating, Fitch said.

Qatar is one of the biggest exporters of LNG along with the United States, Australia and Russia. Asian countries led by China, Japan and South Korea have been the main market for Qatari gas, but demand has also grown from European countries since Russia’s war on Ukraine threw supplies into doubt.

Qatar Energy plans to expand LNG production capacity at North Field from 77 million tonnes per year (mtpa) to 110 mtpa by end-2025, 126 mtpa by end-2027 and announced a further expansion to 142 mtpa by end-2030.

The North Field is part of the world’s largest gas field, which Qatar shares with Iran, which calls its share South Pars.

Competition for LNG has ramped up since the start of the war in Ukraine, with Europe, in particular, requiring a large quantity to help replace Russian pipeline gas that used to make up almost 40 percent of the continent’s imports.

However, after a decade of meteoric price rise, gas prices dropped earlier this year to nearly all-time lows after adjusting for inflation. Despite that drop, all leading gas producers, including the US, Australia and Russia, want to increase output betting on further demand growth.

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Biden announces another $5B in student loan forgiveness after Supreme Court defeat

WASHINGTON — President Biden said Friday that his administration is forgiving another $5 billion in student loan debt for 74,000 people using existing government programs — continuing his piecemeal approach to write-offs after the Supreme Court last year struck down his sweeping plan to forgive $430 billion in college debt.

The latest action brings Biden’s post-ruling loan forgiveness to about $137 billion, according to a Wall Street Journal tally — as the 81-year-old president tries to demonstrate that’s he’s making good on a campaign pledge as he seeks a second term in this year’s election.

Unlike the plan struck down by the Supreme Court in June, under which each borrower would have had $10,000 or $20,000 removed from their federal balances, the latest actions lean on implementation of laws passed with bipartisan support.

The latest beneficiaries include 44,000 teachers, nurses, firefighters and others who qualify for the reprieve after working for 10 years in careers defined as public service under a 2007 law signed by Republican President George W. Bush.

Another 30,000 people are having their debt forgiven because they were entered for 20 years into income-driven repayment plans that cap expenses as a percentage of earnings, according to the White House.

Income-driven repayment programs have been supported by both Republican and Democratic administrations.

“I won’t back down from using every tool at our disposal to get student loan borrowers the relief they need to reach their dreams,” the president said in a statement.

Biden’s nixed forgiveness plan was decried by critics as a political stunt because it was announced shortly before the 2022 midterm elections in response to an activist campaign after fellow Democrats, including then-House Speaker Nancy Pelosi (D-Calif.), said it wouldn’t be legal for him to wipe away student debt with the stroke of a pen.

Republican critics of Biden’s focus on loan forgiveness have called for action to stem the growth of college expenses as a way to reduce debt burden.

After leaving office as vice president, Biden was paid about $1 million to serve as a professor at the University of Pennsylvania from 2017 to 2019, despite making just nine known campus visits and not actually leading any classes.

In 2021, Biden picked Penn President Amy Gutmann, who had also provided him with a DC office where misplaced classified documents were later found, to be US ambassador to Germany.

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Is a global debt crisis looming? | Debt

The world is drowning in a record amount of debt concentrated in developing countries.

Global debt has hit a record $307 trillion in 2023.

That includes the amount of money owed by corporations, governments and individuals around the world. And it’s equivalent to almost $40,000 for every single person on the planet.

Multiple crises in recent years have worsened the problem – pushing countries to the brink. And that simply means some of the poorest countries in the world are servicing their debts, instead of providing for their people.

So, who’s to blame for the delay in debt relief efforts?

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New York has fourth-highest household debt in US — and it’s rising

New York state residents have the fourth highest personal household debt in the country — and the burden is only growing heavier, according to a recent government report.

The office of Comptroller Thomas DiNapoli released a report this week indicating that New Yorkers were carrying an average household debt of $53,830 as of the fourth quarter of last year.

The report noted that while New York was still below the national average of $55,810, the state was still well above the national average when factoring in just student loans and credit card debt per capita.

By the end of last year, Americans amassed a total of $15.6 trillion in household debt. New York accounted for 5.6% of the total, or $869.4 billion.

California led the nation in national average household debt. Texas, Florida, New York, and Illinois round out the top five.

New Yorkers’ average household debt rose to $53,830 at the end of 2021.
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According to DiNapoli’s office, average household debt has rose by 4% nationally and 2% in the Empire State during the first two quarters of this year — outpacing the previous highs that were set in 2008.

The vast majority of household debt both nationwide and statewide was made up by mortgage debt, according to the Thursday report.

In New York, 69.2% of residents’ average household debt — or $601.2 billion — was owed to lenders for mortgage payments. Nationwide, that figure was 70.2% — or $10.9 trillion.

“Households across the nation have record levels of debt, after a temporary decline at the onset of the pandemic in 2020,” DiNapoli said.

California, Texas, and Florida are the only states with more household debt than New York.
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“We’re seeing debt rise for New Yorkers with student loans, mortgages and credit cards.”

DiNapoli added: “Borrowing can help individuals achieve their personal and financial goals, but high levels of debt can cause damaging long-term consequences.”

“I urge policymakers to improve access for individuals and families to financial education resources, so they are better prepared to build a stronger financial future.”

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