LONDON: Four Caribbean Community (CARICOM) nations have been named among countries at risk of government external debt crises and one of them has been specially highlighted among those “rapidly heading” in that direction.
Guyana, Haiti and St. Lucia are on a list of 29 countries identified by Jubilee Debt Campaign – a coalition of national organizations and local groups around the UK calling for the unjust and unpayable debts of the poorest countries to be cancelled – as facing a risk of finding themselves in debt crisis. Dominica is said to be at “high risk” based on large external debt, a large and persistent current account deficit, and high projected future government debt payments.
The information is contained in the Jubilee’s document, titled, “The new debt trap: How the response to the last global financial crisis has laid the ground for the next”, which analyzes public and private debts owed by countries across the world.
Jubilee’s analysis defines countries as at risk of a government debt crisis if they have net debt higher than 30 per cent of GDP, or current account deficit more than five per cent of GDP; and future government debt payments exceeding 10 per cent of government revenue or, where projections are not available, current government external debt already over 40 per cent of GDP.
The 14 countries at high risk have net debt of more than 30 per cent of GDP; future government debt payments exceeding 15 per cent of government revenue or, where projections are not available, current government external debt already over 50 per cent of GDP; and a current account deficit that is more than five per cent of GDP.
“Of these, some are already likely to be back in debt crisis, but the figures are not yet available to show that they are,” the report stated. “These are expected to have high government debt payments over the next few years; they include nations such as Dominica, Ghana and Mauritania.”
The report stated that Belize, the Dominican Republic, Grenada, Jamaica and St. Vincent & the Grenadines are among 22 countries already in a government external debt crisis, with “high government debt payments leading to large amounts of money leaving their country each year, along with an overall net debt with the rest of the world”.
Net debt for that group stands at over 30 per cent of GDP and external debt payments exceed 15 per cent of government revenue.
No Caribbean nation was named in the list of 28 countries at risk of facing a private-sector debt crisis.