 Ladies and gentlemen, you're all very welcome to today's lecture at the Institute of International European Affairs by Professor Carmen Reinhardt, who holds the St. Van Ackers Professorship of the International Financial System at Harvard's Kennedy School. Professor Reinhardt will be speaking to us on the subject of debt in developing nations. This is a great delight and honor for the Institute to have Professor Reinhardt address the Institute today. Her lecture is part of the Development of Matters series, which is supported by Irish Aid. That's the Irish government's program of International Development Corporation. This has, in fact, been quite an important week for the Development Matters series. We began by having Colin Brophy, the Minister for Development and the diaspora, speak to us about food security issues and the Horn of Africa. A couple of days later, he was followed by Hannah Tete, who is the UN Secretary General's Special Envoy for the Horn of Africa. And now, completing a very busy week, we have Professor Reinhardt. Carmen, you're very, very welcome. Let me begin by summarizing your career to date. And then I'll mention a few housekeeping points for the audience. Professor Carmen Reinhardt holds the chair at Harvard, which I mentioned. She's also a senior fellow at the Council on Foreign Relations from 2020 to 2022. She was senior vice president and chief economist at the World Bank Group. She has written a bestselling book with Kenneth Rogoff entitled This Time is Different, Eight Centuries of Financial Fully, a very challenging title, which notes the striking similarities between recurring boom and bust episodes throughout financial history. She is an elected member of the Group of 30 and forms magazine Identifier as one of 50 women who are shaping the future of global finance. So I look forward very much to what she will be telling us today and to the Q&A session, which will come after. As I say, it's part of a development series with Irish aid, which the Institute hugely appreciates. And it's the topic which Professor Reinhardt will be addressing is one of enormous importance, particularly in the wake of the success of shops that low-income countries have experienced over the last few years and the implications for debt distress and solutions. So on housekeeping points, Professor Reinhardt will speak for an initial 20 minutes or so, and then we will have a Q&A session. Audience members are invited to contribute questions and views as they occur to them. Please use the Q&A function on Zoom, which you'll find at the bottom of your screens. And in addition, you are encouraged to tweet on the event. Using the handle at IIEA. We're also live streaming the discussion. So a very warm welcome to all those who are joining via YouTube. So with that, I have great pleasure in inviting Professor Reinhardt to take the floor. Carmen, over to you. Thank you, David. It's a real pleasure to be here. And I do think indeed the topic of debt in developing countries, particularly low-income countries is of great urgency. Of course, the problems of debt do not end with the low-income countries. It definitely is post-COVID, a global financial crisis for the past 15 years. It's also been a accumulating issue for also middle-income countries and high-income countries in varying degrees. So without further ado, let me ask for the PowerPoint slides to be put up. My theme today is very much connected, as noted, on the issue of debt. But it's broader than that. And I've called this the reversal problem. I presented the issue at a presentation at the bank very about a year into the pandemic and have highlighted that this so-called reversal problem is a setback for many developing countries in many dimensions. Per capita incomes are lower, inflation is higher. Not only debt levels are higher, debt servicing costs are also higher, fiscal conditions have deteriorated, poverty, the income inequality. It is encompassing is the point I am making. So that will be my theme today. If I could ask for the next slide. So as I noted, I am going to cover and I'm going to do it sketchily because I want to lay out the topic but make sure that we have plenty of time for discussion. Here's basically a menu of the highlights, if you will, of some of the developments in this setback, which is really starting to resemble, especially in sub-Saharan Africa but not exclusively, the ambience, the environment that we saw during the debt crisis of the 1980s. And I will speak to that next. Next slide, please. But let me just be very clear on what we mean by the reversal problem. Eduardo LaBaria, a former student of mine at the World Bank and I have written about this. There's a link to a blog that also goes through the essence of this presentation today. But there's this often cited, oh, the pandemic. The pandemic meant, of course, the pandemic has been a once in a century shock and incredibly synchronous shock. But the point I would like to leave with you is that the problems in many developing countries started well before COVID. They had a very good solid decade of growth and various markers of prosperity between the early 2000s when the last debt crisis was cleaned up. Up until around 2015, commodity prices crashed. China growth. China had been a big engine of growth slowed. And since 2015, many cracks began to manifest themselves. And of course, then comes COVID. And not only does COVID aggravate the situation, COVID is followed by the Russia-Ukraine War, which I've just heard. Of course, those of you that have followed these series has led to a widespread problem of spiking food prices and, in many cases, food insecurity as well. So when my son was young, I used to read to him a series of unfortunate events. And that's basically what we've had since 2015. Next slide, please. And this is just a very quick profile, because per capita GDP correlates enormously with many of the social and economic markers that we care about to assess development. And what this trajectory shows is the long, multi-decade decline in per capita GDP from the onset of the debt crisis of the 1980s. If anyone recalls, I was working in Wall Street at the time. The debt crisis of the 1980s was importantly, not cost entirely, but importantly triggered by the significant tightening in monetary policy in the US at the time in October 79. Paul Volcker basically took charge of the inflation problem and hiked rates rapidly, and in the most significant manner seen since World War II for developing countries, middle income, low income alike that had a lot of dollar debt, a lot of variable rate debt, a lot of short-term debt. The spike in international interest rates was a major trigger point. And I hope this does sound familiar to you, given where we are in the current juncture, notwithstanding the fact that the orders of magnitude of the tightening that we are seeing unfolding today are not at par with what we saw in the early, the very tail end of the 70s and the beginning of the 80s. But what this trajectory highlights is that once the debt crisis hits, its effects are protracted. This is a point that Ken Rogoff and I make in our book. Debt crises take a long time to resolve. International mechanisms for resolving debt crises are deeply flawed to nonexistent. And for the middle-income countries, it took about a decade to resolve. This was the Brady Plan. For the low-income countries, the HIPAAC Initiative, the highly indebted poorest country initiative, didn't really come around till 1996, didn't really take hold till around 2000. So you're really talking about two decades of debt crisis, hence the long slide. Then, as I said, came a period of prosperity and recovery. You see the big surge in real per capita income. But notice that much of the surge was really just to get back to where they were in 1980. And then since 2015, we've been definitely in more perilous territory with that surge and growth stagnating. Next slide, please. And a feature that I would like to highlight, I'm not going to go into the details. These slides are available for those that are interested. But the point of this table is to highlight that while the pandemic was clearly a synchronous across-the-board shock, 90% of countries had per capita income declines in 2020. This is a higher share of countries than in World War I, in the Great Depression of the 30s, and in World War II. So it was the most synchronous shock that we've seen since at least 1900. But an important element of the recovery has been its inequality. It's been a very regressive shock, and the recovery has also been very regressive. If you look at the share of advanced economies that have recouped their prior peak in per capita income, that share is around 37%. If you go to middle-income country, that share falls to 27%. And if you go to low-income countries, it's below 20%. So the extent of the recovery has widened the gap between low-income countries and high-income countries, although no one is admittedly, at the moment, doing all that well. No one is an overstatement, but the majority of countries. Next slide, please. So this just reiterates the World Bank has for years published the Global Genie, and that measures inequality across countries. And this just highlights the point that I've been making. Unlike the global financial crisis of 2008-2009, which hit Ireland very hard along with many advanced economies, the global financial crisis of 2008-2009 was called global, but it was really a crisis in advanced economies, mostly, connected to property bubbles, banking problems, and over-leverage of households in the financial sector in a nutshell. But after the global financial crisis, what we saw is very rapid growth in developing countries and middle-income countries, and much more stagnant and uneven recovery in the advanced economies. This is not what we're seeing post-COVID. Post-COVID, the most faltering recoveries, have been among the developing, and particularly the low-income countries. Next slide, please. And this inequality problem across countries is mirrored within countries for the countries for which the World Bank has collected data on income distribution. Income distribution, particularly in middle-low-income countries, has worsened with the COVID shock. It doesn't really predate COVID. Next slide, please. And so poverty reduction, which had stalled already prior to the pandemic, has now reversed. And in effect, 2020 marked the first increase in poverty since 1998. Next slide, please. And I'm just going to mention briefly that the increase in poverty is also matched by an increase in learning poverty. And the last point I'm making between turning to the debt issues is this cast a very long shadow on growth because its impact that human capital and the hit has been particularly hard in middle-income countries. So when we talk about debt problems, so far we've been mostly focused on low-income countries. But the impacts on the disruption to education, which means down the line impacts on productivity and on growth, will be hitting also middle-income countries, particularly hard. Next slide, please. So surprise, surprise. Given what I have outlined, a fairly grim profile in which per capita income has either stalled or outright declined. And most social indicators have shown setbacks, which has required greater government assistance and intervention, surprise, surprise. Debt levels. And I particularly look at here at debt to revenue. Debt to revenue levels follow this U-shape. This is what we call the reversal problem, from bad to better, back to bad. And the issue of debt concerns, it's not being alarmist by any metric. Among the 73 countries that were eligible for the Debt Service Suspension Initiative during 2020 and 2021 in the height of the pandemic, for those 74 countries, more than 60% of them are at either debt distress or at high risk of debt distress. This is based on the joint IMF World Bank Debt Sustainability exercises, which bucket countries into groups, low probability of distress, moderate probability of distress, high probability of distress, and in distress. And that those two buckets, the high-risk buckets, the share of countries there, and we will talk more about that, have increased dramatically. Next slide, please. What is very telling about this chart, just, and again, I'm rushing through, so we have time for discussion. This is debt servicing. This is total external debt service. What is very telling is we've been living in a world, at least in the advanced economies, and notably, very notably, Japan and Europe in a negative nominal interest rate environment, but exceptionally low interest rates by any historic metric, and low for long. And even in that low rate environment, I would know debt servicing costs had been rising already, even before the rate hikes, and even before the recent post-high-inflation turning points that we have seen at the Fed, at the ECB. And this, importantly, owes to the fact that risk measures, credit risk, had been already deteriorating, as I said, even before COVID. I would add that the debt servicing costs are poised to rise quite markedly, because we've had, while we've seen a better distribution of external debt than in the early 1980s, less reliance on short-term debt, which, of course, is very prone to rollover risk. We still have what our near-records share of variable rate debt, external debt, so that the recent rate hikes translate to debt servicing fairly quickly. Next slide, please. At the risk of sounding just outright alarmist, it's important to note that economic setbacks, historically, have also often gone hand-in-hand with setbacks to political order and political stability, and have been a big factor giving rise to social unrest. This is an index from Freedom House, in which they look at democratic values. They have a whole range description. I highlight their webpage there. The metrics of what is happening on this front are also of that U-shaped variety, from bad to better to worse. Definitely, the economic slide is also having political and geopolitical dimension. Next slide, please. Contrary, and this I mentioned earlier, so I'm repeating myself, but I will be as quick as possible, at the end of the global financial crisis of 2008, 2009, the big takeaway was that credit risk for the advanced economies. Certainly, this hit Ireland, it hit Portugal, it hit Spain, of course, Greece was in a league of its own, it hit Italy, it may hit it again, and the outturn of the global financial crisis was worsening in the credit ratings of the advanced economies, but an improvement in the credit ratings of the emerging and developing countries. This is being reversed now. And so, look, I'm not gonna tell you that we are on the verge of the same drama, the debt with drama that we saw in the beginning of the 1980s, in which when Mexico defaulted, Mexico being a very important emerging market, a large emerging market, it had a lot of contagion effects, and you quickly saw domino effects, and it doesn't have that drama on the emerging front, it doesn't have the drama yet of what we saw after the global financial crisis in which it started as a banking crisis and then concerns about sovereign debt crises came to the head a couple of years later as Greece defaulted. I'm not saying this is, we're on that scale because a lot of the most affected countries are not systemic countries, they're very poor, they don't have a big footprint in financial markets, but the risks are rising that the spread of debt problems could go well beyond the low-income dimension that I've been focusing on. Next slide, please. Capital flows, which are a big, not foreign direct investment, but capital flows in general have been a big propeller of growth for developing countries historically. And on the West, this is the global picture, on the West, the situation is complicated by, notwithstanding better news on the US side, on the inflation front, we are in much tighter financial conditions currently than we had been in years and that has slowed, importantly, dramatically, capital flows to not only the low-income countries which many are at a standstill in terms of capital flows, but also to middle-income emerging markets. Moreover, and this is a big moreover, on the right-hand panel, what you see is lending, net lending from China. China and Sebastian Horn, Christoph Trevish and I have been writing about this for years. And China was a big lender, especially commodity producers, many of them low-income, but non-exclusively. And that lending continued to dramatically increase by 2017, however, there were signs that, A, the countries that had borrowed were doing poorly and were having debt-servicing difficulties, so debt-restructuring with China have increased significantly also. And B, China was having its own slowdown and its own domestic problems, so lending abroad has been impacted. So bottom line, this is a double whammy in terms of the reverse of capital flows. Next slide, please. And I'm almost done. And adding to the COVID walls of slow recovery and the setbacks that I've noted, the rise in food prices. So this isn't been, food is very, rising food prices is also extremely regressive because it is low-income households that have spent the liar just share of their consumption basket in food, and it is the low-income countries that have the largest share of their CPI, of their consumption basket also in food. So the security, food security situation, which had worsened even before the Russia-Ukraine War has contributed to this reversal problem. Next slide. And this is just further detail on, which highlights that the big takeaway from this slide is not just a low-income problem, it's also a middle-income problem with food prices, again, contributing to a cross-country and within-country inequality. Next slide. To sum up, you know, what lies ahead, I think there are major risks. The debt crisis for low-income countries is not a hypothetical. The majority are already either there or at high risk of a debt crisis, as I noted earlier. I think a big concern is what if a big emerging market this is something that we had a discussion on global tail risks at the IMF last week. And this was, of course, one of the big tail risks. What if a country like Turkey, like Brazil, like South Africa, a country that has a bigger footprint in capital markets, you know, could have a debt crisis and trigger contagion, we are at a much more vulnerable point on that score. And, you know, again, I would like to leave you and this is a good point for discussion with the fact that at the end of the debt service suspension initiative towards the tail end of 2021, the G20 came up with a so-called common framework for debt treatments, which is supposed to deal with debt overhangs and unsustainable debt cases. So far, and it's been a trial balloon, we haven't had a single debt restructuring to date under the common framework. Progress has been non-existent on that score practically. Well, not practically, it's been non-existent. And we don't seem to have a catalyst for promoting debt reduction and, you know, debt write-offs, debt haircuts that are needed. So the last note of concern is I am worried that this is beginning to look like a replay of the very slow moving 1980s in which it took about a decade to resolve the crisis of the middle-income countries. And it took about two decades to eventually resolve the debt crisis of the low-income countries. We do not have a very good financial architecture to deal with the growing debt problems that we've been discussing today. And I'll stop here. Thank you very, very much for a terrific sort of toured horizon of the challenges, the threats, the risks that we're facing into. There are many quite troubling points you bring up and there's a lot of detail that we would love to get into. Let me begin with a question really about the restructuring. As you rightly pointed out, there hasn't been a single debt restructuring so far under the common framework. But do you think that political pressure will begin to build towards restructuring at some level, bearing in mind the number of countries, the low-income countries, which are now in, let's say, serious debt to stress. I mean, you make the point that they are all in a debt crisis to some extent, but it seems to me that we're going to be facing into deteriorating circumstances and it's hard to see debt structuring being left to one side. It's going to come more and more center stage. But what are the political, what are the realistic chances of achieving debt restructuring agreements in the near future? I think that the prospects are pretty grim. We have a very complicated geopolitical situation. The tensions between China and the West and China and the US in particular are a huge factor. I bring this up because I noted this in my presentation but a big factor is that for a lot of the low-income countries, China is the big creditor. In effect, China is a bigger creditor than the entire Paris Club official predators combined. And so China has to play ball with the other official creditors. This is a strange situation because China has been accustomed to doing its own thing when it comes to debt restructuring, the typical Chinese debt restructuring approach, which is reminiscent of what we used to do in the early 1980s, by the way. This is not unique to China or China bashing in any way. Creditors don't like to take losses. That's the reality, that's an eternal reality. Creditors don't like to take losses. So the typical approach China has had thus far is you may do some maturity extension, but really there's no haircuts, there's no reduction in improvement in the terms of lending. What is often offered is some cash flow relief, meaning you have some grace periods, but this doesn't solve the debt. Grace periods do not solve a debt overhang. What you need are haircuts. And I think China is not there yet anymore than US banks were willing to take on significant haircuts at the early stages of the 1980s debt crisis. As I said, look at the G20 has had problems even issuing communicates. So it is a complicated geopolitical situation and to get all the creditors to line up and notably for non-Paris Club, because it's not just China, but China is by far the largest, but also Saudi Arabia, UAE and to a lesser degree, India are also other non-Paris Club creditors. And getting a coalition on what to do is I think very, very far off. So I am not optimistic that we're going to see a turning point. I would close by saying though, I don't think to be very fair that the Paris Club members are also rushing in to say, oh, we got to do haircuts. And often the response that I've heard from board members representing Paris Club countries at the bank is, well, we've done this before and here we are again, why should we do haircuts again? So the answer to your question is a very pessimistic outlook. Thank you, government. A couple of questions here on the interaction between climate and debt to stress. So first a question from Dara Lawler, who's a researcher with the Institute and Dara asks, if one is looking at the sovereign debt profiles of countries in the global south, how big an issue is risk from climate? For example, the destruction of capital by natural disaster or from natural disasters. So I mean, what impact does climate have on debt profiles in the global south? And if I may add just a second question, Carmen, which is what would your views be on the Bridgetown Initiative being championed by Prime Minister Mathew Barbados, which envisages cutting off debt repayment when climate disaster strikes? That's a question from Eileen Schollin of the Irish Department of Foreign Affairs. Could I try you on those two? Those are, the climate question is enormous. Enormous, the World Bank is of course, you know, been increasingly involved in trying to tackle the whole range of issues. Let me begin in reverse and talk about the changing debt contracts. Since that's, because the other question is, also has many other dimensions that I wanna highlight. Look, state contingent contracts, especially when you're dealing, I mean, I think investors again are, you know, always been, if you can get a guaranteed return or walk closer to a guaranteed return, that will be the preference. But state contingent contracts make a great deal of sense, especially for countries like Barbados, that, you know, face the probability of increasing frequency of climate shocks. So, you know, the Debt Service Suspension Initiative was really, if you could call it a trial balloon, it was, you know, debt servicing was suspended for almost two years, almost, during a period of extreme duress during the pandemic. And so having that built into a contract to me makes a great deal of sense. The problem is, of course, state contingent contracts have always had a hard sell in markets. So the cost of borrowing and the ability to raise fund if you start building in such clauses is gonna be tough, although they make imminent sense from certainly from the vantage point of the borrower. Now, turning to the big question of climate risk, which is huge, it's a huge, the World Development Report, which was started while the next one, the first one that I did was on financial fragility. The second one is looking at migration patterns globally. And your question is right on point. A great deal of the migration patterns as we look ahead are going to be shaped by climate risk. And climate risk, not just of the Barbados variety where you're more likely to be hit, but the growing size of the desert, the various dimensions of climate change. Again, talk about regressive. Much of the adverse changes are concentrated, are very regressive, are concentrated in low-income countries. So climate needs, climate financing, climate financing needs are another layer. Financing needs for these countries I highlighted in my presentation are already high. They're high because they have large deficits still, a legacy of the economic slowdown. They're large because debt servicing burdens, as I showed, have been rising and the levels of debt have risen dramatically. And add to that new needs to finance adaptation and mitigation. This is a very tough, and remember, I also mentioned that if you take a big picture of global capital flows, the North-South capital flows, on the West, those capital flows are being slowed by the interest rate hike more moving to risk off rather than the full risk on we had for so many years. On the East, you have less Chinese lending. So already sort of in basic needs, capital flows, things are slowing. When you layer climate needs on top of that, that it's going to be a very difficult, very difficult to reach any kind of meaningful climate goals with such a Spartan amount of funding. Because again, let me get to the bottom line. When you talk about too many investors, private investors, oh, we want green bonds, we love green bonds, we want to be green, we want a very green hole. However, the first thing that they want is guarantees on many projects. And so, if you're closing a mine, if you're closing a coal plant and closing it, that project doesn't have a positive rate of return. I mean, it has social rate of return, and if institutions like the World Bank start guaranteeing these projects as investors would love, they're basically unraveling their own mode of operations. I mean, the World Bank and the multilaterals, mostly IMF is different, but they work by issuing AAA debt so that they can use the low-cost funding to provide concessional finance. But if you start denting that AAA status by guaranteeing a lot of very high-risk debt projects, you start undermining your very model, and in the end, the guarantees are gonna be given by the G20, by the big governments. And so, there's this impasse again between, yes, we want to be green, but we want big returns also. And who's gonna pay for that? Indeed, yeah. Thank you very much, Kamen. The enormous debt burden which many low-income countries are carrying and which has been exacerbated by the shocks we're talking about, particularly the pandemic, are obviously detrimental to achieving the sustainable development goals and the 2030 agenda. There is, as you know, a summit which is due next September at which the world will take stock in strategic terms of how we're doing on the STGs and what has yet to be done in order to accelerate progress. What would you like to see being championed in the area of debt relief and debt restructuring at that summit? I mean, the summit will be an opportunity for world leaders to recognize that there is a huge contribution to be made to achieving the STGs by making it easier for low-income countries to manage their debt. Is there a particular initiative that you would like to see that summit take? Well, I think what I'm going to say here is sort of a minimum and a more that, okay, so at a minimum, why don't we catalyze, give some signs of success to the common framework? Why don't we start at least at a minimum minimum even if the common framework, which has, you know, a lot of areas that could use significant improvement in terms of improving the, you know, mechanics across creditors and all kinds of details that I don't have time to elaborate on here, but even taking it at face value, why don't we at least show progress and make it a point to increase the, because there's a complaint, why don't more countries apply to the common framework? Well, why would you apply to the common framework if you're going to be labeled as having a debt problem and you have had seen no evidence that applying to the common framework got anybody anywhere? So progress by progress, meaning real debt restructurings in the context of the common framework are at least a starting point. Yeah. A comment, a question from Dan O'Brien who asks, how well-prepared is the global financial system for haircuts on significant emerging market economies of the kind that you referred to a moment ago, such as Brazil, Turkey, and so on? Is the world financial architecture ready for haircuts relation to those countries? So look, this is a critical question and I'm going to answer it in two stages. First is the first part, the common framework should be very much part and parcel working also with private creditors. So a common treatment across official creditors is necessary but not sufficient. It's common treatment also across private creditors. Now, this doesn't going to the heart of, I think Dan's question, these numbers don't really challenge the solvency or create a big hole for the private creditors, like for example, in the early 1980s, you had a handful of US banks that had massive exposures, especially to Latin America, but not exclusively, and it really created a severe vulnerability shock. As long as it's the low income sphere, it doesn't, I don't think, I think that could be absorbed, even common treatment could be absorbed. However, I don't see that happening imminently either, that we are going to necessarily make progress on that score, but I think that that shock could be absorbed. I think when we start getting really worried is if a Turkey, Turkey is, Turkey is, it's got a lot of issues and it's had a lot of issues for some time, but I mentioned Turkey because Turkey is a country that also could significantly extend the turbulence to Europe. Turkey does play a card on immigration policy. Turkey also is a borrower from European banks, and so the nature of the impact on the financial system's ability to absorb the shock starts really to change complexion, importantly. Let me say something of banks versus non-banks and then I'll stop. Look, unlike the 1980s, which I mentioned, core money center US banks were overexposed and were vulnerable and probably hadn't not been for Paul Volcker also reducing interest rates dramatically. Many might have had even a worst outcome. Commercial banks were core money center banks, these were cleaned up importantly after the global financial crisis. However, there's a lot of non-bank, the shadow bank vulnerability is a different matter. And I always worry always that you never know where, how many of you remember, maybe not, I don't know, but long-term capital management, LTCM. This is the heavy exposure to Russia and others and the 1998 shock. And all of a sudden you have vulnerabilities and exposure that quickly rippled through capital markets. And that is hard to predict. So core banks, I don't think that's the problem. I think within shadow banking, I think there is a lot more potential for a contingent that it really depends on how big is the country, how connected. That's why I highlighted the Turkey connection, which is, I think, very germane. But that's a different level of risk. I think the low-income side can be absorbed without major problems. Thank you, Kamen. Another question here, what can be done to, what steps can be taken to improve transparency of debt data? This has been, thank you for that question. I devoted so much of my energy at the World Bank to doing, trying to achieve just that. I mentioned that a lot of the work that I've done with Sebastian Horn and Christoph Trebisch over the last few years was concentrated on what we call China's hidden debts. Chinese contracts, debt contracts, since 2013 often included nondisclosure clauses, meaning a country borrowing doesn't disclose those debts to the IMF, to the World Bank, or to often even their own within government. So if it was an SOE, a state-owned enterprise borrowing, that state-owned enterprise may have been forbidden to share that information on that transaction, even with other parts of their government. So debt transparency has always been a problem. Always been a problem, right? I mean, back in the 1980s, there was a lot of opaque lending as well, but opacity reached, I think, a global peak with the surge in China's overseas lending. The World Bank, I took under my direction, the global debts, the World Debt Statistics are published under the direction of the chief economist. We worked very hard to start incorporating because all these unknown hidden debts, is what's the meaning, how meaningful is the debt sustainability exercise if the debt levels that you're working with are way off, right? I mean, we remember the scandal with Greece and Goldman Sachs that the debt numbers had been fudged and so on. Well, this is an even greater order of magnitude that we're talking about affecting a lot of countries. So the World Bank has taken the most recent World Debt Tables had the biggest increase, the biggest spike, the biggest revision, upward revision in debt in its history from 1950. So we're, and the IMF and other multilaterals are also trying to really incorporate these hidden debts. However, I think there has been progress, but I think there is still a lot of unknowns. I don't wanna also over focus just on China. For example, there's a lot of lending from I mentioned other non-Paris club members like Saudi Arabia and UAE, which often that lending is often done by through deposits to the central bank and the like, which are often difficult to trace. And another form of new lending, if you will, newer lending from China is PBOC, People's Bank of China Swap Lines. These are all difficult to quantify. So it's, these are all difficult to quantify. So it's, the multilaterals have to be on their toes that they cannot take reported debt numbers at face value. And, there were more, I'll conclude by saying that the G20 language on the common framework and other debt documents in every time it included language on transparency, it was an issue for China. And often the outcome was that the language would be redrafted. So the geopolitical dimension definitely complicates the transparency question as well. Carmen, I think we might have time for just one final question, if you're good enough to take it on the common framework. Three countries have so far asked for their debt to be treated through the framework. But, and these are China, Ethiopia and Zambia, but none of them has been able to complete the process. How can the process be made more accessible for developing and low income countries who might not have the structures, the domestic structures in place to complete the process? Okay, so, so this is a very important question. And it enables me to talk about domestic debt also, which is a big factor, big new element that I hadn't been able to talk about. Let's start with external debt. Okay, so Chad was the first to apply and Chad had looked for a while after a lot of a lot of back and forth that it could, we could have an agreement on a haircut that involved the Paris Club creditors, it involved China and it importantly also involved Lencor, the single largest creditor to Chad. And then lo and behold, oil prices rose. And all of a sudden, Chad, which is deeply impoverished, I mean, it's always been deeply impoverished, but the situation is deteriorated markedly over the last five to 10 years. And all of a sudden it was deemed that, well, at current oil prices, debt is sustainable. So Chad is a big success story, not because it restructured its debt, but because supposedly it doesn't have a debt problem, which is of course, largely a work of fiction. Chad has restructured his debt on two occasions since 2015 and it will need a third and it was, so I'm highlighting the Chad situation because it looked for a moment as the closest thing to a success before it fell apart. Now, I mentioned this earlier, what country has an incentive to apply for treatment when you look around in the three countries, let's leave Ethiopia aside because it also has a lot of political and unrest issues that are difficult, but the ones that have applied have gotten nowhere. But the question also raised the issue of the money, let me say something quickly, one big new factor, relatively newer factor in the current debt landscape of low-income countries and certainly even more so middle-income countries is that a lot of the debt is domestic, meaning it is issued under domestic law as opposed to international law. And I think the multilaterals are working and perhaps should work even more aggressively on fostering best practices on restructuring of domestic debt because a lot, practically all the focus of debt renegotiation historically have been on external debt, IE debt issued under New York law or London law, not issued under local law. And so I think development of best practices will help because at least that is an area where countries have more control because they don't have to rely on the external machinery for debt restructuring. They can rely on their own courts. But of course we know that domestic debt restructuring can be rapacious, I mean, Argentina is of course classic example of that, but let me stop there. Thank you very much, Carmen. I mean, it's a fascinating topic and we would all love to have a bit more time to be able to pursue it further. You've been very generous with your own time and the presentation was wonderful. Thank you very much. You've also kindly offered to make the PowerPoint available for those who are who have particular interest. You also have contributed in a very engaging way to the Q&A and we thank you for that. So once again, thank you for making yourself available for today's event, Carmen. The Intude has greatly benefited from it and we wish you all the best for the future. Thank you, thank you for having me. Great pleasure, thank you very much. And before we end this session, I would like to, on behalf of the Institute, thank Irish aid warmly for the generous support with which they have helped us to mount this series of lectures of which Professor Carmen Reinhardt's lecture today is the eighth and final in an episode. This year's I've developed major series now comes to an end. Next year's we'll have implementation of the STGs as a central focus, bear in mind that a special STG summit is to be held at the UN next September, more or less at the halfway point in terms of implementation. So once again, thank you to our audience. Thank you to Professor Reinhardt in particular for today's event and thank you to Irish aid for having made it all possible.