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Debt relief

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Altin Kukaj

on 24 October 2014

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Transcript of Debt relief

Debt relief
What is debt?
Debt is an obligation to pay or render something to someone else.

An obligation owed by one party (the debtor) to a second party, (the creditor).

Debt can be in the forms of money, goods or services.

Jubilee
World organizations
HIPC
What is Debt Relief
Statistics
Actions
References
http://jubileedebt.org.uk
http://chartsbin.com/view/2108
http://www.wisegeek.com/what-is-debt-relief.htm
http://www.youtube.com
http://web.worldbank.org/
http://jubileedebt.org.uk/countries
http://www.imf.org/external/np/sec/pr/2005/pr05292.htm
http://www.financialadvisory.com/article/12-02-2010/how-and-why-do-countries-get-into-debt/
http://old.jubileedebtcampaign.org.uk/Peru+4062.twl
http://jubileedebt.org.uk/actions/support-argentinas-fight-against-vulture-funds
Vulture funds
Odious Debt
Case study

Argentina
The heavily indebted poor countries
(HIPC) are a group of 39 developing
countries with high levels of poverty
and debt overhang which are eligible
for special assistance from the
International Monetary Fund (IMF)
and the World Bank.
The HIPC Initiative was initiated by the International Monetary Fund and the World Bank in 1996
The IMF estimates that the total cost of providing debt relief to the 40 countries currently eligible for the HIPC program would be around $71 billion
Irin and Altin
Vulture Funds are financial
speculators looking to
profiteering from countries
in debt crisis
http://jubileedebt.org.uk/press-release/us-court-puts-rights-of-billionaire-investors-above-the-people-of-argentina
http://jubileedebt.org.uk/countries
What is Jubilee?
Inspired from the ancient idea of jubilee
Campaigns:
Jubilee for justice
Stop vulture funds
Britain's doggy deals
Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious debt when government leaders use borrowed funds in ways that don't benefit or even oppress citizens
How does it works ?
Investors in the fund profit by buying this debt at a discounted price on a secondary market and then suing the debtor for a larger amount than the purchasing price
WORLD BANK
IMF
The IMF reports that in some cases the claims by vulture funds constitute as much as 12 to 13 percent of a country’s gross domestic product (GDP).

To date, 35 countries – 30 of them in Africa – have received the full amount of debt-relief for which they are eligible through HIPC and MDRI. Chad is a current participant and is expected to graduate from the initiative by the end of 2014
The World Bank Group provides debt relief to the poorest countries through the HIPC Initiative and the Multilateral Debt Relief Initiative (MDRI).
The programs of IMF and WB have relieved 36 participating countries of $96 billion in debt since 1996, freeing up their governments to spend money on poverty reduction.
What is debt relief?
By definition, debt relief
is considered to be partial or even
total, cancellation of a debt
Recently it has become a
common practice for organizations
such as IMF or the WB
Vulture funds buy debt often at deep discounts with the intent of suing the debtor for full recovery. Vulture funds have averaged recovery rates of about 3 to 20 times their investment, equivalent to returns of (net legal fees) 300%-2000%.
Loan from Romania
Becomes Debt
Agreement for debt relief
Third Party

It has started in early 1960s
Peru
Sometimes it is more than 12%
of a country's GDP
They work in an international scale
Democratic Republic of Congo
Joseph Mobutu Sese Seko borrows
DAI & FG Hemisphere buy their debts
In 2010 Companies wanted 100mil US$
2012 Doubt appear
Liberia
2009: Two vulture funds sued Liberia in court of London for 30 years old debt of 6.5 mil $
Liberia had to pay 20 mil $
Vulture funds do not recognize the HIPC
Ethiopia
Is currently in arbitration with 2 vulture funds.
The debt was 8.3 mil $ and companies want more than 170 mil $ now.
Kintex and YugoImport
Cameroon
Cameroon is being pursued by multiple vulture funds such as :
Grace Church Capital (Cayman Islands): 9.5 to 40 mil $
Antwerp (UK Virgin Islands): 15 to 67 mil $
Sconset Limited (UK Virgin Islands): 15 to 196 mil $
Winslow Bank (Bahamas): 9 to 50 mil $
Zambia
Private companies
Jubilee Debt Campaign is part of a global movement demanding freedom from the slavery of unjust
debts and a new financial system that puts people first.

Why countries have debt?
African nations pay 14 billion in debt
remunerations to wealthy nations while
receiving less than 13 billion in international
aid….
Releasing from debt will make them spend
more on their needs.

History of debt relief
It first started in the 19th century as a domestic debt.
In the late of 20th century it was referring the ''third world''.
During the 1970s and early 1980s, many developing countries sharply increased their external borrowing.
In Latin America it started during the Latin American debt crisis 1982
The estimated $8 billion debt relief deal is the largest debt write-off by the World Bank and the International Monetary Fund under global programs launched in 1996 to ease the debt burdens of the world's poorest countries.
Over time, total relief from all of Zambia's
creditors will amount to approximately
US$3.8 billion
Under today's agreement, financing in the amount of US$6 million will be made available to ease Zambia's debt burden.
Deeper and Broader Relief
Faster Relief.
Stronger Link Between Debt
Relief and Poverty Reduction
Debt relief reduces Liberia’s external debt
stock by more than 90 per cent (see chart)
to about 15 percent of GDP, 4.6 billion US$
Ethiopia before January 1st 2005
they got 100 % debt relief, around
170million US$
History of Jubilee
The Coalition was formed as a successor organization to the Jubilee 2000 Coalition. Many campaigners felt that it was necessary to continue working together to monitor the G8's promise to deliver $100Bn of debt relief at Cologne in 1999, and make further progress on the cancellation of debts the poorest countries
The US$1.267 billion in reduced debt
is attributable to multilateral, bilateral,
and commercial creditors.
In reaching the HIPC completion point, African countries also will become eligible for further debt relief from the IMF, IDA, and the African Development Fund (AfDF) under the Multilateral Debt Relief Initiative (MDRI)
The vulture funds bought up
billions of dollars worth of
Argentina’s debt in the early 2000s
93% of lenders agreed to reduce
debt .
Vulture funds demand the full amount plus
interest and penalties


Bilateral
and commercial creditors
This category includes individual national governments as well as private enterprises;

Multilateral
creditors
These are multilateral banks such as the World Bank and the IMF and regional financial institutions such as the African Development Bank.

How do they get the
money?
How does the HIPC
works ?
Stage one: leading to decision point
Stage two: leading to completion point
began in 1975
interest rates soared
worse by the poor use
not eligible for HIPC or MDRI
Full transcript