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Drivers push their three-wheelers while waiting in a line to buy petrol amid the country's economic crisis in Colombo, Sri Lanka.

Reuters

Is the global debt apocalypse here?

As the world largely began shifting to the “we have to learn to live it” stage of the pandemic late last year, many economists anticipated that hard-hit low- and middle-income countries might finally catch a break.

But then Vladimir Putin’s imperialist instincts got the better of him, and Russia decided to pancake Ukraine. The war’s economic effects are reverberating worldwide, with food and fuel shortages sending already high inflation soaring. Unsurprisingly, emerging economies with shallow pockets are reeling.

The backstory. Amid the pandemic, many low-income countries took on new debt to insulate their economies from the economic pain caused by rolling lockdowns, closed borders, and business closures. But even before COVID, many countries – such as Zambia, Sri Lanka, and Ecuador – were already heavily indebted partly as a result of government mismanagement and corruption. The pandemic-induced recession caused global indebtedness to balloon to a 50-year high.

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Chinese Foreign Minister Wang Yi poses for a photograph with Sri Lanka's Prime Minister Mahinda Rajapaksa during their bilateral meeting in Colombo, Sri Lanka, January 9,2022.

REUTERS/Dinuka Liyanawatte

The looming pandemic debt cliff

Right on the buzzer, Sri Lanka on Tuesday narrowly avoided its first-ever sovereign debt default. But the cash-strapped country is still on the hook for a lot more cash this year, which is shaping up to be a very painful one for low-income countries deep in the red due to COVID.

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The Graphic Truth: Deep in the red with China

The pandemic has thrown many already-indebted countries further into the red. The problem is two-pronged for many Asian, African, and Latin American countries. They have taken on huge amounts of debt from the IMF to weather pandemic-related economic uncertainty, while also being caught up in a debt trap set by China, which funds large infrastructure projects in developing states but often with complex or misleading fine print. We take a look at which countries out of a group of 24 surveyed states owe China the most compared to their respective IMF debts.

Stopping the Debt Spiral in the World’s Poorest Nations | World Bank President | GZERO World

Stopping the debt spiral in the world's poorest nations

"There needs to be a dramatic and deep reduction in the amount of debt on the poorest countries. That's clear." As the world's poorest nations struggle to recover from a devastating pandemic, World Bank President David Malpass argues that freeing them of much of their debt will be key. His conversation with Ian Bremmer is part of the latest episode of GZERO World.

Ian Explains: The World Bank's Role in Global Economic Recovery | GZERO World

The World Bank's role in global economic recovery

Nearly eighty years after the World Bank was founded, its mission of lifting the global poor out of poverty has never been more urgent. Ian Bremmer explains on GZERO World.

Could Our Response to COVID Help End Poverty? | A GZERO Media Town Hall

GZERO Media Town Hall: Could our response to COVID help end poverty?

GZERO Media, in partnership with the Bill and Melinda Gates Foundation and Eurasia Group, today hosted its first virtual town hall on how to fight global poverty amid the coronavirus pandemic.

The panel featured Gates Foundation CEO Mark Suzman, Eurasia Group and GZERO Media President Ian Bremmer, and Vera Songwe, Executive Secretary of the United Nations Economic Commission for Africa. The conversation was moderated by Africa No Filter's Moky Makura.

Watch the full video above.

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Is debt forgiveness a good idea?

You've lost your job and can't pay your bills. Your debt is growing, and it's not clear when (and if) you can pay it off. Or maybe you're a lender who needs to get paid back — even if that means accepting less money later than planned—because you've got financial worries too. This is the grim reality now taking hold in every region of the world.
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