 healthy amidst this global pandemic we are in. Thank you for joining us from wherever you are for a continuation of the Economics of COVID-19 webinar series. It's co-organized by the SOAS Department of Economics and the Open Economics Forum. So the Open Economics Forum is a part of Rethinking Economics Network, which aims to promote plurality of ideas, paradigms and theories in economics. You can follow them on their social media accounts, so make sure to follow them and not just for their webinars but also updates for their upcoming events. It is also the video that the webinar that we're going to have today is also going to be uploaded on the SOAS Economics website. So you can also keep the conversation going with the hashtag economics of COVID. You can look for the details at the chat box after this. So the aim of this series is to provide a critical perspective to the recent economic developments related to the current COVID crisis. So first of all, I would like to thank those behind the scenes who have organized these events. I'm sure most of us here who have participated in them found them very informative. And before we move on, let me introduce myself. I'm Asfa Azizi, a Master's in Development Economics student at SOAS and I will be your moderator today. So today's webinar is the sixth in the series and we will be talking about COVID-19 and the debt crisis in low and middle-income countries. So with the government-imposed lockdowns to tackle the virus in many countries, a common activity has almost grinded to a halt, which in turn would affect a government's fiscal position since they have to spend to mitigate the crisis, but at the same time, they would have depleted sources of income. So furthermore, many developing countries depend on external financing to finance their expenditure. So this could pose several issues for the country as they try to grapple with the economic and healthcare crisis. So today we will discuss the situation in developing countries, the issues faced by them in servicing their debt, what the IMF are doing, for example, and what private characters are doing, and what's the best way to avoid a wave of default. So providing the lead with us today is Ms. Christina Lascaris. She's a PhD candidate in Economics at SOAS. So she's working on debt prices resolution with an emphasis on the World Bank and the International Monetary Fund. So Christina was a research fellow at Duke University Centre for the History of Political Economy and she co-convened the Politics of Economic Seminar series at the University of Cambridge. So before handing it over to Christina, let me just lay out the format today. Christina will be speaking for about 30 minutes followed by an interactive Q&A session. So I suggest that you submit any questions that you might have in the first 40 minutes of the session in the chat box. So we will then compile these questions and pose it to Christina in the Q&A session. We would also like to know which country you're currently based in, even if you're not going to ask a question. So maybe before we start, we can have everyone to enter in the chat box where they're currently based in right now. So without further ado, I'm handing this over to Christina for the next 30 minutes. See you Christina. Okay thank you as far very much for the introduction. It's a real great pleasure to be presenting my work in this context because I'm a PhD student here, so yeah the honour is really great. I also want to thank the organisers for putting this together, especially Sara and Yannis for the invitation and all the behind the scenes help that's kind of gone into putting this together. So I do want to just like a small word of caution which is I still haven't quite, this is very new to me, giving a webinar so patience for any kind of delivery issues. So the title of the talk, when push came to shove COVID-19 and debt crisis in London Lincoln countries, what I'm really going to try and do is talk a bit about the push bit of that title. So where were things just prior to the beginning of the pandemic and how the pandemic and the associated responses are kind of creating a shove effect. So I'm going to highlight two or three things. One is on this where were we in the situation leading up to the pandemic and what has been the main institutional response. I'm going to focus a lot on the kind of big headline responses around the IMF and the G20 and I'm going to do that by talking through some of the things that I've been working on in terms of tracking the response. So the first thing to really highlight is you don't need to look very far to find a series of warnings that lower middle income countries are facing a looming debt crisis. So report after report over the last seven or eight years has been highlighting looming debt traps, growing debt vulnerabilities and sort of high risk of debt distress. I've pulled out two of them, both by AukTab, but the IMF's new macro economic implications in lower income countries report basically has been tracking the same thing and also a couple of headlines. So there's been a lot of warning building over the last few years and the kind of reasons behind this warning or what these warnings are about can be seen in the next slide. So again this is from one of the UN reports. This is total debt domestic and external middle income countries on the left, low income countries on the right and the sort of the concern, I'm not sure if you can see my mouse here, but the thing that's been flagged by these sort of increasing warning signs are the sharp increases that are visible from 2014 onwards, both in public and in private levels of indebtedness for both middle and low income countries. And what's particularly worrying especially if we look at the low income country panel is that that big steep reduction that you can see taking place from the end of the 90s to the mid 2000s was sort of the result of several large scale multilateral debt relief initiatives that were sort of quite tedious to happen and were conditional on sustained market reform structural adjustment programs. So whatever gains were made in that period that reduced that what you could see in that graph are sort of being reversed and that's part of the part of the concern that some of those reports have been pointing to and as to those sort of conditions of debt relief that have been implemented in the past, there's a lot of work, a lot of work coming out of this department that has shown sort of the the detrimental impacts of those structural adjustment reforms. You can also look to the ILO on the impact that that has. So one of the things that the previous warnings are pointing to is the rising levels of indebtedness and the second main kind of change is that there's been a remarkable change in how countries are financing themselves meaning from who and that's visible in this in this graph here which looks a little bit dense so I'll just talk through it. So what this graph shows is a sort of long view on the creditor composition of external public debt according to who the main creditor is and that sort of bottom band at the bottom in dark blue are the multilateral institutions so World Bank IMF portions of developing countries external debt so that's a steady slightly growing share from the 1970s to 2017. The yellow band above are bilateral loans so those are country to country loans and you can see that taken together those official sector loans have traditionally been a large component of developing countries external debt and the proportions are much higher if you just look at loan income. One of the things I want to draw your attention to is this big band right above which are commercial bank loans so usually in the form of syndicated loans and those formed a very large chunk of developing countries external debt in the 80s and where the primary sort of problem source for the 10-year long decade of crisis of the 80s which the lack of its resolution led to the loss development decade and if we move towards the end of that decade where it was more resolutely addressed we can see that it was addressed in a way that transformed the sort of financing landscape so this change in the creditors is really important because those commercial bank loans were effectively securitized and starting the emerging bond market and that's the growing segment that we see in the darker blue that grows over time the component of private creditors bonded debt that increases dramatically if we look towards the end of that time series after 2010-2012 and it's that real deterioration from 2012 onwards that has been sort of the cause of a lot of concern and one of the things the thing that I want to make a point about this graph is that in terms of thinking how the overall sort of political economy of debt crises play out I'm reminded of a kind of famous animation that maybe many people may have seen when David Harvey was sort of describing the previous global financial crisis in this animated kind of reciting and narrating over an animated sketch where he says well capitalism's crises are not often resolved but just sort of moved around geographically and temporally and we see that quite clearly with the 80s crisis that the way that was sort of moved on paved the way for well the emerging market crisis of the 90s and 2000s and we can kind of take that as a corollary to how the way the global financial crisis was resolved has sort of set the stage for the current sort of the current debt crisis that is unfolding and some of those some of the ways that the global financial crisis was addressed largely involved to a large degree very very expansionary monetary policy and pegging of interest rates close to zero and then big programs of QE this sort of generated a large amount of global liquidity and the inability of institutional and other investors to find higher returns in sort of rich countries has led to the global search for yield and big investing in developing countries securities equity and debt securities and so this issue of how like global liquidity conditions really affect so global so conditions very much out of developing country control affect how debt crises play out has is really important and that's sort of the kind of content of a lot of the work that I've been doing with a colleague and friend Bernice from the University of Hampshire so just to finalize the point on where we were at just before the pandemic began there are many ways of trying to indicate the growing risk of debt distress and one of them sort of highly imperfect and long criticized is through the IMF and World Bank's joint debt sustainability framework which tries to assess the risk of that distress in low income countries so countries that have access to World Bank Compensational Financing and the point just to make here is just if we look at the what was going on in 2013 just as a snapshot and the green and the yellow sector and sections show you know countries with low and moderate risk a bit of stress and the proportion of high or in debt distress being the two top and if we look at how that's gone over time the portion of countries with high or in debt distress has written dramatically this was in July of last year and moving that on to the latest figures prior to the pandemic almost close to half of low income countries were in some sort of risk of high risk of debt distress or in debt distress before the pandemic began and I should say that this is just applying to low income countries but it's not just low income countries that have faced that difficulties over this time and sort of there have been higher income countries the ones that come to mind Lebanon, Ecuador and Argentina who have started having trouble repaying the debts and this is important because we kind of seem to mark the beginning of the 80s crisis with the Mexican default of 802 where in fact a series of countries had started defaulting and having trouble much before that so the pandemic has brought on a whole new sort of landscape into these issues and just picking up some headlines and Jayati Ghosh writing over a month ago now on the COVID-19 debt deluge and some data from Jubilee debt campaign that a lot of developing countries spend a lot more on debt payments than they do on health obviously disastrous in a given the large healthcare costs that are needed and some of the sort of headline problems developing countries are facing is very much linked to this also to the bottom graph which shows which sorry the source of which is the industry professional industry body for private financial institutions the IIF which which shows enormous reverses of capital flows so the pink bar right at the end is basically showing portfolio activity but also investors in those securities flying out from emerging from a subset of emerging markets but the trend is overall so some of the some of the kind of economic problems that are being generated are okay the health care health care issues very low capacity in many key health health infrastructures unemployment scarleting scarleting as for I mentioned it also output grinding to a halt so that leads to great reductions in revenues and not only just domestic revenues but global global demand contracting and leading to less export revenues which are a key foreign source of foreign exchange that developing countries use for debt repayments the flyout the capital outflows led to collapsing currencies and there's a great sort of warnings of humanitarian disasters unfolding including a family recent reports and by the FAO and the world through program and so and the other thing to note is that the main initial reaction was each to the room and a unilateral response across the board and that kind of really aggressive competition in medical supplies has really set the stage for what's it's quite grim grim kind of setting so and the the key response to these things and the key results I'm going to focus on has as many there's sort of institutional response on the global sphere and that's sort of that's been driven by the IFI so the World Bank and the IMF and position themselves as the sort of leading firefighters in this in this effort they sort of boosted their they've been boasting about their lending power and sort of acted to scale up various things I'm going to talk about shortly and the G20 so kind of group of high income countries many high income countries so what's been the primary response I'm going to look at the IMF in some detail so we just start with this slide one of the things I've been trying to work out is well what has been the IMF response to the covid pandemic and the way I've been doing that is by tracking the financing requests that are being made to the IMF facilities so the IMF has been boasting about how it's going to sort of play a central role in the developing debt crisis and it's going to do so by dishing out loans and loads of loans so trying to work out what that really looks like and I've I've sort of been making a data set and then this is a graph that kind of pulls it out from there where just to talk through how the IMF financing is being organised and one of the main yet the main way that the IMF is is sort of acting in this crisis if we look here on the left hand side and this sort of represents the the loans that the IMF gives on non-concessional terms so the main pot of money that the IMF has from country subscriptions sort of gets channeled in a variety of ways and on the very left hand side of this graph we have what's written in sort of darker blue and we have the financing facility called RFI rapid financing instrument and and that's you can see before a whole list of countries requesting financing from that facility and why is that important it's important because one of the ways that the IMF responded to this responded to the crisis is by increasing the amount of funds that countries can access from this facility and the rapidity with which those loans are granted so we all familiar with a slow grip of money for reforms that the IMF traditionally does and that's usually through the form of programs through some of those facilities that they might be more familiar with like SVA standby agreements and the like and so there are as you can see countries that are requesting funds through program facilities at the time including augmentations of existing facilities so new funds on top of ones that have already been committed and but we are seeing a huge increase that what the IMF has tried to do is rapidly disperse new loans and same sort of story for the concessional lending facilities of the fund that's visible on the right hand side and the IMF provides financing on the low market rates for eligible countries predominantly on income criteria the main such trust is the PRGT trust which again has a variety of facilities program full program fully conditional program facilities like ECF and but also an equivalent to the RFI the RCF and as we can see a whole host of countries are requesting funds from that and the third facility that the IMF has revamped to deal with the pandemic is this separate trust CCRT which has been the center of a debt service relief initiative that it has launched and so I will talk about that in a little bit more depth and so one of the things that we can see in terms of like who's requesting financing what are the characteristics of that so today more than a hundred countries have made requests for financing several new loans are being approved every day and the distribution of that is sort of fairly centered in subterranean africa and in low-income countries but I think the thing that I want to get across in terms of what interests what I'm finding interesting in trying to make sense of all this is I've sort of listed three things that seem important right now one is a sense tracker in some respect where I'm trying to see oh well how much sense does it make to be distributing lots of new loans to countries already in a debt difficulty and going back to the previous points that many countries are already in high risk of debt stress and many of the loans are going to countries that are already facing great difficulties and a second sort of tracker is a transparency tracker and that just sort of looks at whether information data for instance was published at the time of the request and of course it might come afterwards but the publishing the assumptions on which loans are made is important for public professional scrutiny and the final thing is the realism tracker so in the instances that some information is published that accompany these loans what are the assumptions that the IMF is making in order to make those loans and that's important because for the countries that we do have data available you can see that the assumption that the IMF is making is that either that growth will bounce back to pre-COVID levels very quickly or it's assuming that countries will dramatically contract their expenditures sort of in a programme of consolidation over the next few years and that kind of like familiar heroic and unrealistic assumptions of the fund is something that repeatedly surfaces but it is also important for the fact that the kind of any sense that well these are low-conditioned loans so countries are accessing funds without having to pursue heavy programmes is a sort of short-term thing because it seems that a lot of these programmes will be graduated to fully conditional programmes and very much down the line because the amount that countries can access from low-conditional facilities is low so for those more interested in this the IMF has published a sort of staff paper on its emergency response and that expectation that all of these countries will sort of move into high conditionality countries programmes is there and so just to talk back again about this sorry excuse me this CCRT facility and that's the sort of the so the first response by the IMF increased the amount of loans that countries can access and the second main response has been the announcement of a debt service relief initiative so that's playing out through this CCRT facility whereby the kind of source of money that goes into that pot is from donors so the IMF is now engaged in a global kind of fundraising drive to raise money to commit to to that fund the UK government was one of the first ones to commit Japan France other countries have also pledged resources to it and the announcement was made in April that that money can be used to for a short period of time so for the six months period from now to October to pay for debt service due on IMF loans and eligible countries currently only include 25 and yeah we'll see how that progresses so at some points on that one concern that's being raised is that that debt service relief that's being provided is not necessarily new net money for developing countries there is a concern that the amounts and the amounts being pledged are relocating sort of committed aid funds and as in previous sort of the global financial crisis the aid flows to developing countries fell and that's definitely a concern now but it's also that so those aid funds rather than going to developing countries would be sort of going into the IMF coffers and the other thing to note is if we just look at this final slide here and this is just a sort of zoom in of the amounts and going to the countries benefiting from this debt service relief one of the things to note is if we look at the countries down on the left and some of the main beneficiaries of this six months of debt service relief are countries it's Guinea, Sierra Leone, Liberia and the debts that they were falling during this period were the ones given out through the Ebola pandemic several years ago and so it kind of highlights the dangers of IMF financing in times of pandemics and if you're interested in that I would recommend looking into the work of Kenti Kellenis and Thomas Stubbs who worked a lot on sort of the IMF role in pandemic financing before so moving on to the third kind of main initiative that's taken place in the last sort of very condensed month is the G20 debt service suspension initiative so sort of these amounts that the amounts that are shown here for instance in this debt service in the IMF that service relief are marginal the total package of this is is just over 200 million dollars and so it's sort of like it's important interesting to think how these signalling effects are affecting other creditors as well and following from this from this initiative of the IMF the G20 has brought forward this proposal for a time-bound suspension on debt service payments so the G20 commitment is for approximately 77 countries so those eligible to receive IDA funds are classified as released about by the UN and there are some some important features of this of this initiative so who does the debts that it covers are the bilateral creditors so if we go back to what was going on here the G20 debt service suspension initiative applies to this yellow band here and and in order to to participate in this debt debt rescheduling sort of plan countries must have had have made requests to the IMF for financing so in order to benefit from this G20 initiative countries must have already requested emergency financing emergency or other financing from the IMF so you sort of see this interlocking sort of creditors groups playing out and the duration of this plan is just till the end of 2020 and there are some things to highlight so what what does it really mean so the the debts forwarding due from now till the end of the year are not getting cancelled they're just getting pushed into the future and so they will have to be repaid and this is a no credit or loss sort of scenario and they will be falling due at a time when other commitments are obviously due and in situations where economic conditions are arguably are going to be a lot worse so this the G20 sort of effectively kicking the can down the road and yeah and and also the kind of range of countries that are applicable are not all that needed and the other thing to note is that how does these how do these reschedulings take place well they take place through what's called the Paris Club the sort of forum through which official creditors reschedule debt and that that should be a warning sign because there's been a long long-standing concern that the Paris Club is a well it is creditors forum and it's been impossible for those debtor countries to sort of gain a fair hearing as we say and a recent guide I would point you to which might be useful for those wanting to look into and learn about the Paris Club there was a new report published by CADTM on the history of the Paris Club and the way that it's rescheduled debts in the past so just to summarise the main international response has been focused on new loans and the IMF debt service initiative which is a small program for six months and the G20's bilateral bilateral debt response so there have been more things that have been tabled in this period many more things and I just want to briefly mention some of them one of them has been that this that the IMF should actually use some of its own resources to fund this and there's been a lot of call for the IMF to use its gold reserves to raise some of the money needed for the debt relief and that's been coming a lot from civil society and there's also a reinvigorated desire to see the IMF create more of its reserve assets called SDRs and one of these calls came from our previous head of department Uli Boltz with other co-authors and one of the things that's that's being mentioned there is that the IMF did create new SDRs in the previous global financial crisis and those SDRs are allocated on the basis of the quota system in the fund so most of those new allocations would go to rich countries and again you know in the in in in in in the past efforts have been made to alter how that distribution of SDRs takes place and proposed by the UN in 2020 in that period and there's always political blocks blocks to it and just reading through the IMF World Bank Spring meetings and kind of announcements coming out it seems that the SDR proposal is sort of falling on deaf ears and a third proposal table was about capital controls and so earlier in March there was a sort of a big sign-on letter driven by former Brazilian finance minister Barbosa together with a host of other people some familiar names like Daniela Gabor, Joe Michelle and Bruno Bonici, Adam Twos calling for the need to utilize capital controls. So just some reflections on how the issues are framed and where we're out in terms of what this means, what it leaves out. The key elephant in the room here is is very much linked to that changing creditor landscape that I talked about at the beginning whereby private creditors are now hugely important in external debt composition and the G20 and its announcement did call for a voluntary participation of private creditors. They will be invited to sit at the table in the Paris Club and the IIF that industry body that presents private financial institutions you know made a press release that sure they're thinking about it but there's no obligation to participate so what that means is that a lot of these measures that we that I've mentioned are kind of going to get used to repay private creditors so whether it's the new loans or the sort of service relief etc. So we see that the instead of sort of any needed any opening up of space going to shore up domestic economies or health sectors will be channeled to repaying foreign private creditors which is again a familiar story. So the kind of call for a standstill to include private creditors as well has been growing there's a lot of high-level discussion in legal circles formal councillor formal legal counsel of the IMF as well and trying to find ways to to use basically contractual provisions in bond contracts to incentivize private sectors to contribute and we could get into the legal weeds of that but the the main the main thing to say that would exclude still exclude commercial bank debt which is not obligated to participate in any any innovations that take place in bonds and again as sort of as countries fail to make payments on private creditors those creditors have a right to sue countries like they have done repeatedly and there will be creditors that will explore this crisis in order to do so. So this has kind of led to again a kind of broadening out of the types of proposals that I think that that can be mobilized I've been trying to follow things that I put on the table and some of those some of the things I'll mention a few and so deep debt reductions deep debt cancellations the the London agreement of 53 sort of very generous reduction of Germany's debt has been has come up a lot as has a big civil society campaign to call for that cancellation and there's been a lot of talk about the use of a state of necessity argument that countries can use in order to justify non-payments and there's also been a lot of talk about extending protection for countries in the main jurisdictions that these debts are denominator are sort of held in so the UK and the US whereby in order to avoid creditors litigating against countries that are not making payments they could extend legislation that effectively prohibits creditors to bring such suits. Long-standing sort of multilateral demands are also on the table the UN has come forward repeatedly in the past but also quite forcefully in the last couple of weeks to call for the reinvigoration of this international sovereign debt restructuring kind of approach that had been had some progress through the general assembly in the last five six years that was effectively blocked by private countries and and there's sort of like an alternative proposal for a coordination group of creditors and debtors. So what I want to just end on is some final closing thoughts on what all of this has brought generated for me I'm very interested to hear people's thoughts on all this and and one of the kind of more hopeful hopeful possibility opening up is also an opportunity to actually plug a new book that's come out and many might you may be aware of the new Rubellage handbook on financialization we were meant to launch it at the IP conference this year which has been cancelled but in there's a chapter in there by Eric just saying Nathan Lagrand and myself where we try to take a historical view on the sort of conflicts between debtors and creditors over time and to point to successful initiatives where debtors were able to secure more of their rights through unilateral action we're trying to upgrade and elevate the sort of debtors rights and all the story quite similar to this has been you might want to follow the UN independent expert on the effect of debt on human rights recently putting out series of announcements on how sort of the necessity to provide decent standard of living provide access to health should take priority over debt service but there's also a less hopeful tone which is sort of digging in these developments you kind of sink into the troubled long troubled water with international financial relations unequal distribution of wealth power across and within countries and so the lack of an international end of the last resort broken international financial architecture no progress on you know quota reform or SDR state of use politics and so there's a lot of yeah deep resurfacing of these sort of issues that keep coming up and and that kind of really raises the specter of yet another time when a debt crisis was left fester for too long because it was not enough in action for great devastation for those involved and and am I I should run out I should wrap up right I'm yeah yeah and so the point is that the the proposal is on the table the question is does the does the world have the stomach to really come to an effective solution of this issue and all right thank you Christina for that presentation I think we've got a lot of important points there and what the IMF is doing what is doing I think now we can move on to the question and answer sessions we've compiled some questions I think we've put it under several rubric I think we'll try to do two at a time all right so the first issue is about coordination between creditors so someone asked if like it seems that some multilateral creditors are coordinating more than private creditors so what are the implications of this lack of coordination among private creditors also since there is no international quality coordinating mechanism does this at all leave room for low and middle income countries like Argentina did to coordinate and say they're unable to pay did you catch that um can you just repeat the first question I think the line is a long one sorry okay it seems that some multilateral creditors are coordinating more than private creditors all right so what are the implications of this lack of coordination among private creditors okay and then also since there is no international coordinating mechanism does this all this does this at all leave room for low and middle income countries like Argentina did to coordinate and say they're unable to pay okay so I'll do my yeah I'll do my best to answer just by going back to one of those figures so um I guess just a kind of quite fundamental thing that governs all these problems is the fact that when the country can't repay each little segment of these has to be dealt with in its own way so that's the sort of long-standing issue that people like Ocampo Stiglitz a lot of people working in this area have been pointing to um that leaves um debtors in a situation where they have to go to all of these creditor clubs and negotiate separately um in ways that both reveal creditor comp into creditor conflict but also leave the the debtor in a position where they have to chase around things uh in different uh fora so that's a fundamental problem here as well and that's kind of that's partly why um uh yeah there's sort of there's a resurgence of these demands for an international coordinating um uh mechanism of some sort um to receive kind of holistic integrated debtor scheduling and equity um yeah and so the point about um debtor countries being able to fight for their own sort of corner there's there's an issue of leadership there and it would be obviously I think there have been attempts to form debtor cartels and to kind of build um more of a uh a sort of coalition um there were some uh from from what I saw recently um several finance ministers in sub-charan africa signing on um again the g77 could play a role but it's again what's the leadership there so there is potential but um again yeah so but I have nothing like of that sort has come through and again if we see the treatment that private creditors are giving argentina at the moment it doesn't look good sorry is that yeah do we have any more questions sorry my audio was on silent yeah uh okay I think it's someone asked regarding this particular chart again uh so it looks like um the composition of external debt uh while bilateral we're sorry the bilateral credit still makes up a large share but it has declined in recent years so what are the implications for potential future debt relief from the decline in bilateral credit to developing countries so you kind of touched upon this already maybe you can argue a bit more um so I find this to the question correctly is about the declining proportion of bilateral loans uh yes so um well the g20 initiative is focusing on low-income countries share sorry the bilateral loans for low-income countries um so it's not in fact this graph is showing low and middle-income countries in low-income countries those eligible for the g20 program the proportion is greater um again the point the point would remain though that it is just one sector one segment of outstanding obligations and and would it kind of cover doesn't cover it it literally will cover all debts falling due from now until the end of the year to two other countries so two other on country loans due so it's it's partial all right thanks for that um okay we'll move on to another question it's about um about policies to control debt can you say something about the absence of momentum for capital controls in the global south that's a really good question um I don't really know um I don't I don't really know um there had been a kind of vague easing easing of like receptability towards capital flow management which was the sort of new way of saying capital controls um basically born out of necessity from the previous crisis where the IMF itself had to impose capital controls on Cyprus and ended up kind of spinning a new um reformed approach to I don't know why there's been others I don't know and again it might be a fear of sticking your neck out and not being the only one but it's an interesting thing to look into all right okay thanks okay another question uh this is on debt repayment so most countries have credit for the infrastructure in the outset and then borrow from meeting debt payback so is there a vision of credit to restrict new soft loans specific to healthcare so that's one question did you get that no could you the line was a bit bad could you just repeat that okay sorry so uh the question was most of the countries have credit for the infrastructure in the outset and then borrow from meeting debt payback is there a vision of creditor to restrict new soft loans specific to healthcare um yeah I'm not sure I fully understand the question um yeah can we move on to another question then okay another question was uh on uh every financial institution creates reserves for bad debt to recoup default in a critical situation so is the IMF uh do they have such a program to relax poorer to relax to poorer countries to counter prevailing pervasive disaster so as far as my understanding is in general the provisions that are made for so the IMF is not quite like a bank um which is partly uh yeah one of the sort of things about how it works so if loans are bad and IMF loans that come out of what's on the left hand side there the general resource account um provisions are made through what's called a burden sharing agreement where other countries somehow get involved in in sharing some of that loss that's being made from other countries that are not paying um but for the concessional loans for the low income country loans are on the right hand side um it's sort of a separate it's separate uh finances so provision I'm not sure exactly how provisions for losses on those accounts happen but they're generally funded by contributions so separate to whatever you know because members subscriptions are basically the sort of like thinking about is actually capital into the fund that's not what's at stake when low income loans from concessional facilities like the trust accounts um have bad debts all right okay um okay let's move on to another question on uh future prospects of recovery do you think it would be possible for most low middle income countries to recover in the short to medium term from the debt incurred during COVID-19 both due to lockdowns and potential loan loan repayment because that yeah I mean I think there's an across-the-board agreement anywhere fighting this sort of uh fallout involves you know large coordinated fiscal responses boosting the domestic economies generating uh capacity especially for health um and it seems at the moment that especially with this kind of like emphasis on loans to resolve to address short term what's going on it seems like well some countries which haven't got that space will be left behind in some way and that will create greater inequality um yeah okay I mean so some of the things kind of being highlighted concerns are being highlighted again is um big decline not just in export revenues but remittance flows because of uh contraction in in in countries where remittances come from and so there's a lot of interlocking things that need to kind of come back in order for those those those foreign exchanges to kind of come back all right it's not that it's not that easy yeah okay uh I think we have some time for maybe two more questions are you okay to take another two more questions and yeah sure all right okay before we close up um this is a question from Latifa one of my classmates she said she asked so Brazil has come forward to present a sustainable debt repayment plan to its private creditors that reduce the profit margin but they still get paid should there be an international standardized framework that enables countries to adopt something similar to brazil's approach or has there been one already okay I'm not familiar with that um so I'd have to look into it to have a look um yeah I don't know all right okay so maybe we can update her later when after we you know look into that a bit more uh all right uh if Latifa wants to send over something I'd be very happy to have a look and yeah all right we can do that right um okay now the question is is there scope and or willingness for debt write offs instead of spend stills reprofiling and refinancing given the long-run inability to pay off these debts um so that is one of the big demands at the moment um that debts do get cancelled and not just push down the line in whatever shape or form so um there is a demand there is a there is a uh that core being you know raised a lot um and again it depends on it because of the sort of fragmented international kind of approach to these things it also depends on how much are these calls being targeted towards specific creditors so for instance if you look back in time with previous crises um the demands for instance that the IMF World Bank accept write down to the loans took almost 20 years to materialize um you know in the 80s they they faced no no sense of obligation to participate and neither in the 90s so it took very long time for the IMF World Bank to recognize that their own their own loans have to be written off and the the reduction in those debts uh sort of took this very uh long-standing political process to set up debt relief initiatives of the past so um that would be a disaster if that's kind of the way that things would happen because uh it took far far too long and the conditions to be eligible for that kind of debt relief uh brought upon their own problems so there is a demand for it um and it is very much in process so it's definitely a watch with space thing because um depending on how broad ranging the sort of spate of debt repayment difficulties become how many countries start falling uh in arrears and their payments and it could well be you know we don't know yet but um definitely kind of looking into the looking to the past just for a sense of how things have been done before um big debt cancellations there are good examples and indeed the London Agreement is one of them and that's sort of the example that points been pointing to a lot but um yeah I think it's a case of trying to find resuscitate those good examples and bring them to the forefront of the debate um okay uh I think uh one last one before we we close it yeah sure all right uh the question is on uh what is your opinion on sovereign debt audits as a mechanism to identify and to create obvious debts sure um so that's kind of uh yeah I don't know yeah a good question um I think there's a there's a sort of toolbox of things that countries have attempted in the past in order to um in order to try and fight for their corner and one of those tools um has been to sort of highlight inconsistencies um and illegitimacies in the debt accumulation process so where did it come that's come from you know how are they contracted who benefited from the loans and those kind of questions um so it has been a tool um mainly civil society tool but also in some instances parliamentary tools so I was involved in the Greek parliamentary process that did the try to do exactly that um but again the issue of obvious debt in court there is a large literature on the on the on the on the odious debt argument and I don't know the legal details of of its profitability but it's sort of um kind of shunned uh it hasn't it hasn't received the purchase that I think a lot of people would have hoped it could have but I don't exactly know the fully reason as to why I guess it's um yeah I don't know all right okay I think that's all the time that we have today um so buddy before before we close maybe you'd like to provide a conclusion to the whole thing um no I want to thank you very very much for hosting me um it's been really some of my work and um it's um yeah it's kind of again the sort of financing aspect of the pandemic has really hit first and the the a lot of the medical aspects is still yet to unfold so it's a very I think the provisor from the beginning it's still very very uncertain times um but yeah hopefully we can end this conversation sometime down the line and I don't know catch each other through the cyber sphere that we're all confined to at the moment all right okay oh sorry I think that someone asked about uh a recent publication that you mentioned before we close do you uh can you answer that for what there was a there's a citation that you mentioned oh what was it about I mentioned a few uh oh okay sorry he's already left it so I I can't I can't really I can't really ask him back again yeah I could um provide a list of references and we can put them on there on the same all right okay all right so I guess that okay that's all for today um thank you guys for joining us I hope you guys have benefited from the webinar today um but before I go I think I should just like to mention that uh you should follow us follow the open economics forum on the social media accounts if you've missed uh any of the webinar before this you can watch it on facebook or you can go to the so us economics website to watch it um uh and uh in the next sessions I think we have a few more sessions after this uh we've got uh shadow banking in corona times with Daniela Gabor uh it's gonna be moderated by Marie and then after that we're going to have a topic on contemporary contemporary pathogens and the food system which will be uh the speaker would be Haroon Afram Ludi from Trent University Ontario um I guess yeah you can follow us on here okay uh thank you guys again and uh again I hope you guys are safe there and healthy and I hope you guys have enjoyed the session and thank you Christina thank you very much that's my mission thank you bye bye