Fiscal Policy and debt Management

The paper examines two related subjects: First, the strictly class character of Greek public debt restructuring, according to its design and consequences, which determined its failure to reduce the level of the debt. The importance of this discussion is highlighted by recent considerations about a new haircut or a new rescue loan to Greek government1. The contradicting plans make clear that sooner or later there will be a new round of crisis with negative implications to Greek working class and people.
Second, five concrete arguments at favor of the cessation of payments and abolition of Greek public debt. In the following lines it is shown the huge responsibility of European Union to the deterioration of sovereign debt crisis in Greece. The damaging role of EU in the Greek sovereign debt crisis, which operated as protector of bankers and creditors and led to the current deadlock was described on October 12, 2012 by Financial Times with the following: “Although IMF staff wanted early on to consider restructuring sovereign debt as part of the debt rescue, they were overruled by Eurozone governments and the ECVB which feared for the health of European banks holding Greek bonds, until a writedown became inevitable. A recent internal review of the conditions the IMF attached to lending admitted: ‘Institutional constraints in the euro area occasionally limited alternatively policy options that could otherwise have been considered – notably, debt restructuring to strengthen debt sustainability’”. Consequently, any solution in direction of reducing the debt and relieving of working class has as precondition the conflict with creditors which now, by big majority, are official (EU members, ECB, national central banks and IMF) and not private.

This paper examines the genesis and evolution of debt and debt overhang in the Caribbean with individual case studies, to extract lessons and make broad recommendations with regard to appropriate mechanisms and policy measures that can be implemented to reduce the debt burden of the subregion.
The econometric model utilized in the paper has shown that a one percent increase on debt to GDP ratio causes a 0.015decline in real GDP growth for the countries in the Caribbean panel, suggesting that debt has a pernicious effect on growth on Caribbean economies. What is even more worrisome was that Caribbean economies did not demonstrate the traditional non-linear (bell-shaped) effect of debt on growth, where there is a range in which a positive relation between debt and growth exists. Traditionally, as debt increases, so does economic growth, up to a point. After this maximum point is passed, the relationship turns negative, where increases in debt cause a decrease in economic growth. In contrast, using the Caribbean countries selected in the panel over the period 2000-2015, it was empirically found that, at all levels, increases in debt resulted in a decline in economic growth for Caribbean economies. It was also shown that the financial crisis negatively affected growth in the Caribbean, lending credence to
the view that Caribbean economies are exceedingly vulnerable to exogenous economic shocks.
More importantly, the employment of measures such as debt restructuring, debt swaps and fiscal consolidation intended to reduce expenditure and increase tax income, while having some measure of success in a few economies, has thus far failed to address effectively the Caribbean’s high debt-low growth conundrum. This may be so because the region’s debt burden, as well as its growth trajectory is heavily influenced by the undiversified structure of its economies and their vulnerability to climate related natural disasters. In view of the foregoing, it is important to address the Caribbean’s debt dilemma in a sustainable manner while fostering structural change and economic diversification. In this regard, the ECLAC approach offers a solution in providing debt relief to the Caribbean. It builds on the traditional debt for climate swap concept, but completely avoids entry into the secondary market. More importantly it incorporates a resilience building component which has been visibly absent in other debt reduction mechanisms proposed for Caribbean SIDS. Ultimately, the results of the empirical analyses, as well as the essential elements of ECLAC’s proposed debt reduction strategy, are designed to encourage the international community, including international financial institutions and development partners alike, to rethink and recalibrate, as it were, their current approach to financing the development of Caribbean economies.

Islam is a complete system of life which offers its own social, political and economic systems to guide humanity. Maslahah is one of the Shari'ah objectives. It is fascinated to prohibit or allow something on the basis of whether or not it serves the public well-being. One of the socioeconomic reforms made by Islam that lead to a great Maslahah for the Populace is the prohibition of interest. Nigeria has one of the highest interest rates in the emerging world and it is one of the countries in the world using a greater percentage of its revenues to service public debts. It is a serious event that is giving the politicians, decision makers, prominent thinkers and economists sleepless nights. This study assessed the effect of interest on economic growth and development of Nigeria. The data used herein was secondary data extracted from Central Bank of Nigeria's Statistical Bulletin from 1990 to 2015. The data was analysed using Ordinary Least Squares (OLS). The findings of the study show that interest rate has negative effect on economic growth and development of Nigeria. Thus, the paper concludes that interest has translated to distressing effects on the economy through its overcrowding effects on private investments and its constraints on the growth and development of Nigeria. The study therefore recommends that Nigeria government should replace interest-based mode of financing with profit and loss sharing mode of financing, and seek for interest-free fund to finance public project to ensure stability, efficiency and development.

The study examines the debt management strategies at the state government level. The significance impact variables used herein include the Bauchi state government's debt trend (from 2008 to 2014), and Nigeria's external debt value, domestic debt value and total debt value. Data for the study were primary and secondary data drawn from Debt Management Agency, Bauchi and analysed with Chi-square. The analysis focuses on whether or not Bauchi state government has problem of managing its debt; whether or not Bauchi state debt management policies are effective; and whether or not Bauchi state government intervention has significant improvement on debt management. The study found that Bauchi state government has problem of managing its debt; Bauchi state debt management policies are not effective; and, Bauchi state government intervention has significant improvement on debt management of Bauchi state. The study equally recommends, for Bauchi state government of Nigeria, an optimal mix of external and domestic debts in the public debt portfolios; channelling acquired loan to productive activities; to circumvent all forms of borrowing, appraise projects to be financed with loan; using more superior method to negotiate for fixed interest payment and varying amortization schemes with consideration of the state's economic limitations; and, ensuring fiscal discipline and high sense of responsibility in handling public funds towards enhancing the efficiency and effectiveness of debt management strategies.

Păcatul originar nu este consumul pe datorie, ci disparităţile crescânde în procesul de distribuţie a valorii între profit şi salarii. Ţările care au realizat creşteri de PIB în condiţii costisitoare prin sporirea accentuată a datoriei publice şi private externe ar trebui să numească rezultatul activităţii lor economice nu Gross Domestic Product ci Gross Debt Product, conform profesorului ceh Tomas Sedlacek; Toţi doresc un stat mic când e vorba de taxe, dar când e vorba de bunuri publice şi alocaţii sociale se doreşte un stat puternic financiar;
Criza confirmă valabilitatea ideii keynesiene potrivit căreia trebuie acumulate resurse în vremurile de avânt economic pentru finanţarea stimulilor fiscali guvernamentali necesari în perioadele de recesiune => competenţă şi înţelepciune din partea factorilor de decizie => mix cu un dozaj corect al componentelor politicii macroeconomice;
Activitatea economică nu este numai o operaţiune tehnică fără legătură cu moralitatea => în trecut etica şi economia erau unite, iar acum cele două sunt separate => situaţia economică gravă la nivel mondial;
Pentru evitarea efectelor nocive determinate de funcţionarea liberă a pieţelor, se impune intervenţia statului prin reglementări adecvate, care să prevină excesele, abuzurile şi pagubele suportate de toţi cetăţenii (marea majoritate fără nici o vină în manifestarea disfuncţiilor pieţei) => a crede în autoreglementarea pieţelor este ca şi când ai considera că un cazinou poate fi lăsat pe mâna jucătorilor cu speranţa că aceştia se vor autodisciplina;
Când vorbim de actuala criză financiară şi economică a capitalismului nu se doreşte întoarcerea la comunism, ci identificarea unui sistem capitalist eficient, care să îmbine sustenabil virtuţile pieţei şi ale statului în condiţii de echilibru între eficienţa economică şi echitatea socială;
Cuvintele cheie ale viitorului sunt, după opinia noastră, echilibrul, cumpătarea şi economisirea. De aceea considerăm că paradigma economică compromisă de actuala criză “individualism, profit cu orice preţ şi indiferenţă faţă de valorile morale” se impune a fi înlocuită cu paradigma viitorului “spirit de solidaritate, profitabilitate în condiţii de stabilitate şi respect faţă de morala socială”.

This paper will be examining significant macroeconomic developments that took place in the calendar year 2019. Such topics will include interest rates, inflation, the Federal Reserve's balance sheet, the brief repo market shock, and asset classes such as equities, bonds, cash, etc.

South Africa is an economy whose poverty, inequality and waste of human capital (unemployment) are only comparable to a country at war. The heinous cost of macroeconomic incompetence, capture or both must rank, in terms of resource misallocation (destruction of economic value), among the most expensive economic dislocations in the world, comparable to the crimes of apartheid and colonialism projects. The nation's primitive understanding of money and indeed banking leads to the misguided use of tools that are highly anti-developmental but also tools that are drivers of financialisation in the economy with their attendant currency risks, poverty, unemployment and inequality generation.

This paper assesses India's current fiscal situation, its likely future evolution, and impacts on the economy. We examine possible reforms of macroeconomic policy (including fiscal, monetary and exchange rate policy) and broader institutional reforms that will bear on the macroeconomic situation. We also consider the political feasibility of possible reforms. We examine both medium and longer run scenarios, and fiscal sustainability and adjustment going beyond conventional government budget deficits, to include off-budget liabilities, both actual and contingent. We conclude with our assessment of reforms focused on improving the fisc.

Özet İslami finans ya da katılım bankacılığı gittikçe yaygınlaşmakta ve büyümektedir. Bu çalışmada iktisat ve dinsel yaklaşımın ruhuna bakmaya çalıştık. Bunu da "la ilahe illa el ilah" lafzı üzerinden ekonomik işlem, riba ve rehin konusu üzerinde özelleştirildi. Kavramların etimolojik yapısına kısmen değinilerek fırsat maliyeti kavramı ve kredinin yarattığı dalgalanma etkileriyle borçlanma konusuna bağlandı. Riba ve rehin kavamlarının birer borç ilişkisi olduğunu ve farklarını ortaya koymaya çalışarak, tefeciliğin yasaklanan bir borç ilişkisi olduğu ifade edilmeye çalışılmıştır. Anahtar Kelimeler: Kredi, borç, fırsat maliyeti, riba, rehin ve "la ilahe illa el ilah" (ilahlar yoktur sadece o ilah vardır)

The article is devoted to research of legal nature of forgiveness of debt as a right-depriving jural fact in the obligation sphere of civil law. The conditions of application of forgiveness of debt, and also mechanism of discontinuance of obligation by this ground are explored. Factors which determine the moment of origin of jural fact in the form of forgiveness of debt are analysed.

On Feb. 19, 2020, the IMF declared that Argentina’s debts were no longer sustainable and called upon bondholders to help resolve the crisis. A schedule for the restructuring of Argentina’s external debt has been announced by the Argentina Ministry of Finance on Jan. 29, 2020. According to the Ministry, Argentina plans to launch a debt restructuring offer in the second week of March and execute the offer by the end of March.

This short essay provides an overview of the intricate challenges that Argentina would be facing in a potential restructuring of its sovereign debt obligations, with a focus on the legal aspects. After mapping the respective debt instruments, which include domestic debt, international sovereign bonds, as well as loans from international financial institutions, I turn to the key legal obstacles when it comes to the (unilateral) restructuring.

The paper posits that the most significant legal risks are likely to occur with respect to international bonds and disruptive legal actions taken by their holders. Uncooperative creditors may engage in holdout tactics with the goal of obtaining a better settlement than their peers by refusing to settle and ultimately launching litigation proceedings in foreign courts. The latest type of Argentine bonds ("Macri bonds") include modern, fully-aggregated, single-limb Collective Action Clauses (CACs), which are powerful in ameliorating such holdout inefficiencies. However, several older bonds ("Kirchner bonds") feature an outdated model of CACs, and generally afford stronger enforcement rights to bondholders. Unsurprisingly, creditor holding Kirchner bonds have already formed committees to leverage their negotiation position. Another related difficulty that this paper reviews arises from the requirement in Argentina's newer ("Macri") bonds that a restructuring offer must be "uniformly applicable" for all affected series of bonds. Given the two different sets of bond contracts involved, this requirement may lead to complex transactional and design questions. Finally, with respect to the interpretation of the pari passu clause included in Argentina's bond prospectuses, the essay argues that a recent decision by the Southern District Court of New York significantly reduced the risks of specialized holdouts attacking a majority-approved debt workout.

To be sure, modern sovereign bond restructurings rest on the basic premise of bondholder democracy. In other words, as long as a sufficient majority of creditors accepts a restructuring offer, most legal obstacles can be overcome. However, the entrance of specialized distressed-debt managers the market suggests that some investors will gamble for a better deal, or try to leverage their contractual rights against the country in a classic holdout manner. While Argentina certainly finds itself in a legally superior position compared to its last debt crisis, the country will soon have to sail into choppy legal seas where all sorts of hazards lurk - some of which the country is all too familiar with.

The article elaborates on the concerns raised in the World Bank report for 2020 released on January 8th. It raises also the rather astonishing fact that the right-wing Greek government but also the supposedly left  SYRIZA opposition are the only ones optimistic about the prospects of the Greek and World economy. The article appeared in the gazette PARON on Sunday Jan 12th, 2020.

Economist Michael Hudson's magnum opus is an erudite and exhaustive treatment of the subject of debt relief ('jubilees") in the ancient Near East, that of the Old Testament included, and how they contributed to social stability in the societies that practiced them.

Repeated crises have proven credit rating agency (CRA) models/methods erroneous and 'business as usual' unsustainable. Oddly, much of this dubious risk management and techno-scientific expertise remains the same post-consecutive catastrophes. Unpacking sovereign ratings, we come to terms with how distortions in 'default risk' assessment and articulation underpin CRA epistocratic/expertocratic exceptionalism and the performativity of a neoliberal 'politics of limits'. Here the imperatives of private markets trump those of democratic politics. We problematize how ratings constitute and validate the conditions and subjectivities that underpin this disinflationary, self-generative political economy of creditworthiness. Fueling an antagonistic relationship between the programmatic/expertise and operational/politics dimensions of budgetary governance, econophysics ratings diminish fiscal sovereignty, as the asymmetry between epistocracy and democracy grows. Management through risk/uncertainty mitigates its consequences and shields CRAs from serious contestation and reform.

Volatility in economic growth has been a constant constraint for Latin American development. While some countries have adopted fiscal policies in the last 20 years, there is still little policy space for subnational governments to promote their own economic growth. This dissertation uses the example of how two Brazilian states used their newly-acquired oil-funds. While Rio de Janeiro used its resources poorly, Espírito Santo managed to promote sound fiscal reforms and improve state capacity. Nevertheless, because of structural constraints within the Brazilian federative framework, neither state was able to sustain a high level of public investment during the Brazilian economic crisis or to promote countercyclical fiscal policy. Espírito Santo creation of the first subnational sovereign wealth fund of Latin America might be a key innovation for autonomous subnational fiscal policy.

Financing Africa’s development requires ingenuity, discipline, and an understanding of fiscal systems – the entirety of government revenues and expenditures, including taxation and debt. This book makes fascinating what might seem at first glance complex. It describes diverse approaches that have been adjusted to local circumstances across the continent and reflects on the push to unite and harmonise toward African union.

Africa is rich, yet resources are lost through loopholes in fiscal systems. Financial resources come from the people, are not unlimited, and do not come easily or without cost. Africans must therefore cherish these resources and use them in nation-building and national and regional development. Efficient, effective, transparent and accountable fiscal systems that are fair and just will go a long way toward financing Africa’s development.

Using examples from all of Africa’s 54 countries, the book makes fiscal matters real and understandable for people, no matter their field. It demonstrates the importance of fiscal law and policy for development and the impact it has on individuals, communities, nations, regional groupings, and the continent.

James holds a B.A. and LL.B. from Monash University and was admitted as a lawyer in 1983. James Woods Melbourne Lawyer has broad experience in most areas of law and is additionally the Managing Director of E C Legal’s shareholder, the debt recovery business eCollect.com.au Pty. Ltd.

Actualiza el comentario sobre situación nacional y se detiene en el análisis de la incidencia de la inversión social y los impuestos en Costa Rica. La evidencia de estudios apunta a que la inversión social disminuye el índice de Gini muy sustancialmente, no así los impuestos.