Can the IMF solve the poor world’s debt crisis?
The fund will freeze out China if that is what it takes to offer relief
It is now four years since the first poor countries were plunged into default because of spiralling costs from covid-19 spending and investors pulling capital from risky markets. It is two years since higher interest rates in the rich world began to put even more pressure on cash-strapped governments. But at the spring meetings of the IMF and the World Bank, held in Washington, DC, this week, many of the world’s policymakers were acting as if the worst debt crisis since the 1980s, by portion of world population affected, had come to an end. After all, the poorest countries in the world grew at a respectable 4% last year. Some, such as Kenya, are even borrowing from international markets again.
In reality, the crisis rolls on. The governments that went bust still have not managed to restructure their debts and dig out of default. As such, they are stuck in limbo. Over time more—and bigger—countries could join them. So in between the spring meetings’ embassy dinners and think-tank soirées, the IMF’s board announced a radical new step to deal with the problem.
Explore more
This article appeared in the Finance & economics section of the print edition under the headline "Time for some hardball"
Finance & economics April 20th 2024
- Generation Z is unprecedentedly rich
- Why the stockmarket is disappearing
- China’s better economic growth hides reasons to worry
- Frozen Russian assets will soon pay for Ukraine’s war
- Even without war in the Gulf, pricier petrol is here to stay
- Citigroup, Wall Street’s biggest loser, is at last on the up
- Can the IMF solve the poor world’s debt crisis?
More from Finance and economics
America is in the midst of an extraordinary startup boom
How the country revived its go-getting spirit
Could America and its allies club together to weaken the dollar?
China would not be happy
Banks, at least, are making money from a turbulent world
It is once again a good time to work on a trading desk