Tropical island paradise tops debt league
Published: Monday, 2 Sep 2013 | 7:03 AM ET
By: Holly Ellyatt | Assistant Producer, CNBC.com
By: Holly Ellyatt | Assistant Producer, CNBC.com
The Seychelles islands in the Indian Ocean,
better known for their pristine beaches and crystal clear waters, are
the most indebted nation in the world, according to a new report
released on Monday.
The "debt league" compiled data on government debt and private debt and looked at how much a country owes as well as how much it is owed.
According to this measure, the Seychelles tops the league of the most indebted nations, with national net debt at 152 percent of gross domestic product (GDP). In order of indebtedness, it is followed by Portugal, Ireland and Greece, countries which like the Seychelles in 2008, received international bailouts.
Published on Monday by the Jubilee Debt Campaign, a group which presses for developing countries' debts to be canceled, the league table revealed that the largest creditor country was Singapore with a net surplus of 294 percent of GDP. It was followed by Switzerland, Saudi Arabia and Norway.
Out of the 127 debtors and 36 surplus countries, the U.K. was the 98th most indebted country with a net debt of 13 percent of GDP. However, the figure for private sector foreign owed debt was 364 percent of GDP - making the U.K. the fourth most indebted country in those terms.
Jubilee Debt Campaign, which used data from the World Bank, International Monetary Fund, central banks and OECD databases for the league table, said lender countries were traditionally seen as "morally superior" to indebted countries for their credit surpluses. "But they are just as responsible for debt crises in a world increasingly characterized by huge imbalances."
(Read more: Is Germany in 'cloudcuckoo land' over Greek debt?)
"The organization believes foreign owed debt is a more important factor causing crises than domestic debt, and private debt is far more important than traditionally believed," Jubilee Debt Campaign stated.
"Though the U.K. ranks 98th most indebted country in the world in the net debt league, its private sector debt is [massive]…this means the U.K. economy is in desperate need of reform - but not of the sort of austerity policies currently being imposed," the report continued.
The economist who calculated the figures for the group said it provided a new perspective on debt. "Often when referring to a country's debt, people only focus on how much debt is owed by a government," Tim Jones remarked. "But it ignores the debt owed by private companies, including banks, even though that was the main cause of the current financial crisis."
(Read more: What Taxpayer Bailouts? Euro Crisis Saves Germany Money)
"Countries in a foreign debt crisis need debts to be canceled. But to prevent crises in the first place we need to regain control of the financial system. The U.K. debt crisis is a crisis of private debt, bank debt, and it hasn't gone away. Austerity will do nothing to help this. Instead we need to regulate lending between states, including by private companies and banks."
- By CNBC's Holy Ellyatt, follow her on Twitter
The "debt league" compiled data on government debt and private debt and looked at how much a country owes as well as how much it is owed.
According to this measure, the Seychelles tops the league of the most indebted nations, with national net debt at 152 percent of gross domestic product (GDP). In order of indebtedness, it is followed by Portugal, Ireland and Greece, countries which like the Seychelles in 2008, received international bailouts.
Published on Monday by the Jubilee Debt Campaign, a group which presses for developing countries' debts to be canceled, the league table revealed that the largest creditor country was Singapore with a net surplus of 294 percent of GDP. It was followed by Switzerland, Saudi Arabia and Norway.
Out of the 127 debtors and 36 surplus countries, the U.K. was the 98th most indebted country with a net debt of 13 percent of GDP. However, the figure for private sector foreign owed debt was 364 percent of GDP - making the U.K. the fourth most indebted country in those terms.
Jubilee Debt Campaign, which used data from the World Bank, International Monetary Fund, central banks and OECD databases for the league table, said lender countries were traditionally seen as "morally superior" to indebted countries for their credit surpluses. "But they are just as responsible for debt crises in a world increasingly characterized by huge imbalances."
(Read more: Is Germany in 'cloudcuckoo land' over Greek debt?)
"The organization believes foreign owed debt is a more important factor causing crises than domestic debt, and private debt is far more important than traditionally believed," Jubilee Debt Campaign stated.
"Though the U.K. ranks 98th most indebted country in the world in the net debt league, its private sector debt is [massive]…this means the U.K. economy is in desperate need of reform - but not of the sort of austerity policies currently being imposed," the report continued.
The economist who calculated the figures for the group said it provided a new perspective on debt. "Often when referring to a country's debt, people only focus on how much debt is owed by a government," Tim Jones remarked. "But it ignores the debt owed by private companies, including banks, even though that was the main cause of the current financial crisis."
(Read more: What Taxpayer Bailouts? Euro Crisis Saves Germany Money)
"Countries in a foreign debt crisis need debts to be canceled. But to prevent crises in the first place we need to regain control of the financial system. The U.K. debt crisis is a crisis of private debt, bank debt, and it hasn't gone away. Austerity will do nothing to help this. Instead we need to regulate lending between states, including by private companies and banks."
- By CNBC's Holy Ellyatt, follow her on Twitter
Four decades of Pp has turn paradise into a Potemkin village.Time to get rid of those monkeys.
ReplyDeletejeanne D'Arc
Jeanne you dont like foreign investers?
ReplyDeleteFDI by definition,should be a potential weapon of developing a country ^s economy and shouls play an important role in achieving the country's socio-economic objectives:improve in flow of capital,human capital,technology transfer,increase in competitive business,environemnt,enterprise developemnt,social condition,impact macroeceonomic growth,paly a role in determining the surplus/deficit in the capital and fianacial account of the BOP statememnt,complement demoestic efforts to meet developmemnt objectives,eliminating monopolisitc behaviors etc..etce..etc
ReplyDeleteUnfortunately,the key problem under Pp is that the approach taken by Pp thugtocrats,removes governemnt rights and power.By doing so,the negative aspects of unregulated inflow and establishment which have overwhelemed the positive aspects they should have.In fact,FDI is threatening our porsperity,sovereignty and mortgaing our future.
Tzhe major issue here on FDI,is no if FDi is good or bad,should or should not be welcomed.The real issue is whether or not governemnt should retain the right and power to regulate FDI and to have the adequate authority and means to policy instruments and opinions over invesment,including FDI.
The most logic answer is yes.Why?While FDI reflects trend for the economic integration of marketfrontiers and is in irreversible trend for economic development,and the process can enable a country to be better utilize its comparative advantages,it process also posses enormous risks.The risks of being concused by infavorable external factors.The conflict between the realization of exteranl economic equilibrum and that of internal economic equilibrum on the macroeconomic control and regulation.Huge amount of floating interanl capitals is leading up to bubbles economies and disordered fluctuation of ofiregn exchange rates.it is weakening the monetary sovereignty of our country and bring along dysfunction of the country monetary policy and affecting the country's balance of payment BOP.In other owrds,it makes us a quasi-state.Thus does not bring economic safety and fianacail stability of the country.Hence why it should be regulated.
Over-complex and durbensome regualtion though,will always act as a block on growth.However,regulation is a key for organizing markets,energizing investment.The purpose is not to induce firms to lower porfitability but if exceptional fianciall results come at the expense of of the final users,the one has to wonder if Seychellois would prefer faster economic growth or sovereignty.
We must restore a balance to protect sovereignty.Therefore,governmnet needs to introduce measures of investment such as competition policies,environmental protection standards,taxation measures and regulation towards the fulfillment of human rights.
The most important principles is that we need to have the authority to regulate the entry and terms of operations of FDI for the sake of the country development objectives and country development andsociety,e.g BOP.To strengthen BOP,governemnt requires authority and options to:reduce import goods and services,measures to control the quality and quantity of FDI and can limit the percentage of foreign equity,prefering joint ventures so that a share of the profits is retainedby locals but also to allow our population to hve control of at least a minimum but significant part of its own wconomy which in turn will help protect the balance of payment.
FDI must inextricably linked with policies in core areas of economic developemnt.For this the selection of FDI projects is a vital.FDI projects should be selected such that they would lead to investment SPILLOVERS in the domestic market.Nad selection must be done sector-by-sector.
Recruitment of expats must be slashed in order to control the number.Quotas and eliminating work permits for specific jobs.(seychelles is loosing millions of dollars annually due to transactions made by foreign transaction).
COTINUES BELOW
Jeanne D'Arc
Fianlly,it must be pointed out that the greatest threat to the ability to control our own destiny is not only due to unregulated FDI,but arises from governemnt poor policies---which leads to rising public sector debt,money leakage etc..ec...Pp illiteracy in economy and throw its structure out of joint under them.corruption,prevarition the diversion of stocks and black market come to day.The economy is shaped to the advantagfe of Pp foreign friends and fiancial institutions thus Seychellis has no freedom to choose its own particular mixtures of policies and conditions on foreign investment.Such policies of laissez-faire driven by law of the jugle lead to socio-economic vulnerability.
ReplyDeleteThe social benefits of FDI must be exceed that internalized by the foreign entrant and its host economy partners(externalities).
Note .countries who have successfully introduce FDI are those who have regulations---such as China,singapour etc...
Jeanne D'Arc
Can St Ange and Morgan tells us,how operating more flights from UAE to Asian Destinations increase arrivals in Seychelles?Or does St Ange considers transit passengers at Pointe Larue Airport as arrivals?
ReplyDelete