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The world’s poorest countries face their biggest bills for servicing foreign debts in 25 years, putting spending on health and education at risk.
Repayments on public debt owed to non-residents for a group of 91 low- and lower middle-income countries will take up an average of more than 16 per cent of government revenues in 2023, rising to almost 17 per cent next year, according to a study to be published today by debt campaign group Debt Justice.
The figures — the highest since 1998 — follow a steep rise in global borrowing costs last year, when central banks sought to counter high inflation with rapid rate rises.
For many of the 91 countries, repayments on domestic debt, borrowed from lenders inside the country, make the burden of debt service overall much greater still, according to separate data from the IMF.
The rise in debt servicing costs will fuel an ongoing debate over debt forgiveness. Multilateral lenders and foreign governments led by the IMF and the World Bank delivered far-reaching debt relief around the turn of the millennium. The Highly Indebted Poor Countries initiative wiped out the bulk of bilateral and multilateral foreign public debt for many countries.
Here’s what else I’m keeping tabs on today:
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Five more top stories
1. The biggest blank-cheque company in Europe is set to be wound up after failing to find a merger target in the financial services sector. Pegasus Europe, backed by LVMH founder Bernard Arnault and former UniCredit chief Jean Pierre Mustier, said it would cease operations and return capital to investors next month pending shareholder approval.
2. Big US banks are expected to reveal the withdrawal of tens of billions of dollars in deposits at the start of this year, even as they gained new customers following the collapse of Silicon Valley Bank. Here’s what else to expect as lenders report earnings this month.
3. The Pentagon said it was “working around the clock” to find out the source and scale of a leak of highly classified intelligence documents that appeared to contain operational data on the war in Ukraine and information from countries in Asia and the Middle East. Read the full story on the breach.
4. The Dutch deputy prime minister has warned of waning public support for climate policies in Europe as showcased by a continuing stand-off between farmers and the government over greenhouse gas limits in the Netherlands. Read more from the FT’s interview with Sigrid Kaag.
5. Jes Staley must face trial alongside his former employer JPMorgan Chase, a New York judge has ruled. The bank is suing Staley for allegedly failing to disclose his participation in Jeffrey Epstein’s sex crimes. Staley lost his bid to have those claims separated from two civil lawsuits against JPMorgan.
Russia’s recent arrest of Wall Street Journal reporter Evan Gershkovich has drawn comparisons with the country’s detention of Brittney Griner in February 2022. But while the American basketball star was released in a prisoner swap after 10 months, former and current US officials warn that Gershkovich’s path to freedom may be tougher and longer.
We’re also reading . . .
Chart of the day
US companies are facing their sharpest drop in profits since the early stages of the Covid pandemic, according to Wall Street forecasts, as high inflation squeezes margins and fears of an impending recession hold back demand.
Take a break from the news
“If Russia is to have any future, it will have to become another country,” says Sergei Lebedev, one of Russia’s most prominent contemporary writers. The exiled writer and former geologist is known for novels that hold a mirror to the country’s blighted past, but in his interview with Guy Chazan, Lebedev returns to the present — and the war.
Additional contributions by Sarah Ebner and Vita Dadoo Lomeli
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