Global Sovereign Debt Monitor 2018
119 countries in the Global South are critically in debt. The debt trend continues: in 87 of these countries, the situation has worsened in the last four years. 13 countries have ceased payments to creditors. These are the results of the Global Sovereign Debt Monitor 2018.
How we evaluate debt
The Debt Monitor 2018 uses three dimensions to evaluate the debt situation of countries in the Global South. Firstly, the debt situation, i.e. the level of debt indicators as at 31 December 2016; secondly, the trend, i.e. the change in this debt situation over a period of four years; and thirdly, any suspension of debt service payments by individual countries are taken into consideration.
The total debt of all low- and middle-income countries worldwide is $6.877 trillion.
Who is critically in debt?
Currently, 119 out of a total of 141 countries examined are critically in debt.
A debt level is considered critical when the value of at least one debt indicator is in the lowest level of the three-level risk scale or if the International Monetary Fund (IMF) has confirmed that there is at least a “moderate” risk of debt distress in its most recent debt sustainability analysis.
Countries with particularly high debt indicators include Jamaica, Mongolia, Bhutan and Mozambique.
New countries critically in debt
Compared to last year’s Debt Monitor, seven new countries now have to be considered critically indebted because in 2016 they again or for the first time reached at least the lowest level for at least one debt indicator.
The vast majority of countries in the Global South are critically in debt.
Six of these countries are in Africa: Namibia, Nigeria, Ethiopia, Benin, Liberia, and Uganda.
The seventh country is Azerbaijan.
If one recalls that Ethiopia, Benin, Liberia, and Uganda had only been relieved of their debt between 1997 and 2010 under the multilateral debt relief initiative for Heavily Indebted Poor Countries (HIPC), it becomes clear that one-off debt relief does not protect countries from falling into debt crises again, as long as the same structures that led to the last crisis persist.