C NEWS
C.1 221220 Market-based development finance in crisis
On December 13 Ghana reached staff-level agreement on a $3 bn IMF credit package. In addition it is seeking to negotiate a 30 percent haircut with private creditors on tens of billions in bonds. Already in September Ghana’s 2026 eurobonds plunged to a record low of 59.30 cents on the US dollar. By the end of October yields had surged to 38.6 %, up from less than 11% at the end of 2021. Meanwhile, inflation is headed to 40 percent and the cedi is the worst performing currency not just in Africa but of all currencies in the world.
You could shrug and say that this is Ghana’s second IMF deal in 3 years and its 17th since independence in 1957. Plus ça change. But it is more than a national crisis. It is the latest sign that the entire model of market-based development financing is in crisis.
Tooze (2022) Chartbook #181: Finance and the polycrisis (6): Africa’s debt crisis
C.2 210717 Carney calls for stronger Government Regulation
For the world to meet its climate goals, governments would have to force industries to follow clear rules, on everything from energy generation to construction and transport, and set carbon prices that would drive investment towards green ends and close down fossil fuels.
“We need clear, credible and predictable regulation from government,” he said. “Air quality rules, building codes, that type of strong regulation is needed. You can have strong regulation for the future, then the financial market will start investing today, for that future. Because that’s what markets do, they always look forward.”
Without such robust intervention from governments, markets would fail to address the crisis.