Debt Cancellation Research Articles

Opting Out: Botswana’s Limited Negotiating Power on Chinese Finance

Since 2013, a downward trend in lending by China’s state-owned policy banks, which are mandated to help finance overseas projects executed by Chinese companies, has been observed in Africa. This article reveals that in Botswana this development started markedly earlier. The country has not borrowed from Chinese policy banks since 2006. Furthermore, overall Chinese lending to Botswana peaked in 2009 and came to a complete halt thereafter. Botswana has nonetheless continued to benefit from grants as well as debt cancellation from China. This shift from borrowing to an exclusive reliance on aid seems counterintuitive for an upper middle-income country with a relatively strong credit rating like Botswana. However, the paper shows that the downgrading of Botswana’s economic co-operation with China came about as a result of the principle of maximisation of national benefit that Botswana’s policy elites uphold in their interactions with foreign lenders, including China. The paper contributes to the literature on African agency as a key variable shaping Africa–China relations but, crucially, also highlights the limitations thereof. Botswana was able to shift to other lenders when it became dissatisfied with the Chinese loan offering. However, it could not get China to change its offering because of structural incompatibilities between Botswana’s demands and China’s approach to foreign lending. The paper also offers a study of Botswana–China economic relations, which have received limited scholarly attention thus far.

The (Non)Taxation of Student Debt Cancellation: Statutory Misinterpretation and Normative Conflict

The (Non)Taxation of Student Debt Cancellation: Statutory Misinterpretation and Normative Conflict

“They Can Never Take it Away from You”

Abstract This article uses the contradictions and complicity of conclusions to think through the United States’ collective student loan burden while grounding this burden at its historical roots in the mid-twentieth century. In particular, it is concerned with the impasse surrounding the Biden administration's conclusion of the federal student loan payment pause and demands for full student loan debt cancellation. Reading with Lauren Berlant's Cruel Optimism, it suggests that this impasse entails a relation of optimistic cruelty: the active infliction of the affective and material conditions of capital as a means of leverage over oneself and others to maintain a status quo. Attendantly, this article draws attention to the centrality of liquidity/discipline to the conditions of indebtedness within financial capital, highlighting three foundational developments in the emergence of student loan debt: the creation of the Guaranteed Student Loan Program as the country's first universal program of student loans in 1965; the establishment of the Student Loan Marketing Association as a government-sponsored enterprise to provide private liquidity for the federal program in 1972; and the successful push to enact bankruptcy reforms to protect the viability of Sallie Mae from the early 1970s on. The establishment of liquidity/discipline at the industry's inception has allowed student loan indebtedness to flourish into the present and highlights the optimistic cruelty of concluding the federal payment pause to enforce a wholly insufficient status quo.

Управління державним боргом України

The aim of the article is to justify the main tools for reducing the debt burden on the State Budget of Ukraine during the war and in the period of post-war reconstruction, based on the generalization of the world experience of restructuring the state debt and providing grant assistance. The research is based on the hypothesis of the need to develop and approve debt cancellation mechanisms for Ukraine, as well as the orientation of state policy to achieve an increase in the share of grant aid in post-war recon­struction, taking into account world experience, in particular the Marshall Plan (МР). To achieve the specified aim, the research methods were used such as: historical, logical, methods of statistical analysis, synthesis and comparison, generalization. Given the unprecedented nature of the destruction caused and the fall in Ukraine’s GDP, there are reasons to insist on writing off most of Ukraine’s debt to inter­national organizations, including the IMF and the World Bank. The second component of the restructuring program should be the application of discounts to the nominal amount of debt for bond loans of private creditors. It was noted that in the conditions of active military operations in Ukraine, it is expedient to attract as much grant funding and long-term loans at preferential interest rates as possible.

Socioecological topologies of student debt in the United States

Student debt burdens are second only to mortgages in the United States’ debt portfolio. With nearly 43 million people repaying trillions of dollars of student debt, it is no surprise that calls for student debt cancellation have grown amid the COVID-19 pandemic, which has only exacerbated already existing economic crises in the US. And yet, meaningful action to address student debt has largely been absent from recent legislation meant to help Americans overcome the residual impacts, including the financial burdens, of the COVID-19 pandemic. Here, we argue the absence of student debt relief is consonant with what we articulate as the topologies of student debt in the US, which we use to contextualize the student debt crisis. We provide two case studies—on the relationship between environmental legislation and student debt, and on the uneven ruralities of student debt—that give insight into the socioecological dimensions of student debt's topologies. We end this article by inviting others to join us as we develop more geographical evidence to support ongoing activism for student debt cancellation.

Sovereign debt and post-war Ukrainian economic growth – system dynamics approach

The aim of the article is to examine the post-war national economy, notably overburdened with significant war expenditures and the effects of sovereign debt restructuring in a wartime period. The research uses system dynamics modelling methods, operates with S-shaped growth, overshoot and collapse dynamic patterns. The oscillation patterns of behaviour have been used to demonstrate the scenario options of possible external debt minimization.The dynamic hypothesis about non-linear behaviour of post-war debt trajectory has revealed the intrinsic growth rate in debt-dependent economy and the inflection point of no return to stable economic growth without radical decision of sovereign debt cancellation. The direct consequence of a negative solution for debt cancellation would be the unpredictable, even chaotic fluctuations of national economic growth rate. Baseline simulation to prove the results of research has been provided. The embedded “dependent-economy” type of macrostructure does not allow to overcome the critical debt overhang level and needs a new national model with appropriate policy to stabilize the economy. Performance of post-war debt repayment depends mostly on an innovative fund, which can be created by export abilities in the framework of post-war recovery plan. The results of the research may be applied by national authorities responsible for macroeconomic debt policy. The obtained results of the study allow us to draw a conclusion about the impossibility of developing the national economy within the framework of the existing economic structure of the developing country. The debt trap, which cannot be eliminated, does not allow to develop the national innovative economy and ensure economic growth and development.
 JEL classification: E37, F34, F35, G28, H63

Ukraine’s debt security in the context of military conflict

In the context of military conflict, security issues come to the fore in all spheres of state life. As the combat capability of the army largely depends on the financing of its needs, the problem of finding additional financial resources is becoming more acute. However, the economy is currently unable to cope with this task due to the destruction of the material and technical base and logistics routes, military mobilisation of some employees, the outflow of labour resources abroad and other factors resulting from the armed aggression. Therefore, the search for ways to improve debt security in the context of a military conflict is of utmost importance.
 The purpose of the article is to identify the ways to increase the level of debt security of Ukraine's economy. To achieve this goal, the state, dynamics and structure of public and publicly guaranteed debt for 2013–2022 have been analysed. It has been established that over the past ten years, the volume of total public debt has been steadily increasing. This was mainly due to an increase in such components as direct public and external debt. The fastest growth in total public and publicly guaranteed debt was in the years of military operations.
 The analysis of the state debt security indicators has shown a deterioration in the state of debt security and the approach of a debt crisis. Due to the significant complication of the conditions in which Ukraine's economy has been operating over the past year, it is proposed to revise the Medium-Term Public Debt Management Strategy for 2021–2024 to define new targets and approaches in this area. Currently, the Ministry of Finance's main task is to restructure domestic and external debt.
 In order to increase the level of debt security of Ukraine, it has been proposed to initiate the development of an international protocol for debt cancellation for countries affected by armed aggression. In the course of domestic debt restructuring, it has been suggested that the yield on domestic government bonds should be reduced, but this can only be done if monetary policy is changed.

Ghana's Debt Crisis and the Political Economy of Financial Dependence in Africa: History Repeating Itself?

ABSTRACTRecent accounts of the re‐emergence of debt distress in Africa, while offering significant insights, fail to provide the historical political‐economic context within which African indebtedness is set. On the surface, spending induced by the COVID‐19 pandemic, economic fallout from the Russia–Ukraine war, and repeated examples of fiscal indiscipline by African governments appear to be the causes of the current wave of debt crises. Beyond these factors, however, this article argues that the present indebtedness, like previous episodes, is rooted in the economic and financial subordination of African economies. Specifically, the article places Ghana's extensive debt within the country's post‐independence political‐economic context, and thus traces the structural factors and external constraints that underlie its economic vulnerability and financial dependence. These include the collapse of developmentalism in the 1970s, the Structural Adjustment Programmes of the 1980s, and an exploitative transnational lending system dominated by Western commercial creditors. Internally, recent fiscal mistakes by the government, within its limited policy space, have exacerbated Ghana's indebtedness. The Ghanaian experience shows that unconditional debt cancellation, widely called for, is a necessary but insufficient measure to address the recurring cycles of indebtedness. Debt cancellation should be followed by broader economic and financial reforms, globally and domestically.

Deservingness and the Politics of Student Debt Relief

As the pandemic accelerated calls to provide relief to millions of student borrowers, President Biden announced executive action to cancel $10,000 of student debt for most federal student loan holders. Both prior to and following his announcement, policymakers have debated the merits and details of student debt relief, focusing particular attention on the perceived deservingness of student loan borrowers. But we have little systematic evidence about how the public evaluates borrower deservingness, or whether elite arguments framing support or opposition to debt relief in terms of deservingness influence public preferences for student debt cancellation. We employ original conjoint and framing experiments conducted just prior to Biden’s announcement to explore each query. We find that, while certain borrower characteristics indicating need (e.g., amount of debt), responsibility for debt (e.g., type of institution attended), and reciprocity (e.g., time in repayment) can influence people’s evaluations of whether borrowers deserve debt relief, those results may not translate to broader deservingness arguments for or against student debt cancellation in a clear manner. Ultimately, our results shed light on a timely policy issue, while extending scholarly understandings of deservingness for a critical and understudied aspect of the American welfare state.

The French approach to entrepreneurial failure: A profound paradigm shift

AbstractFrom the long‐standing disapproval attached to the "bankruptcy" of the entrepreneur, through the contested recognition of the right not to pay his debts, the French law of insolvency has evolved to gradually take into account the fate of the man in entrepreneurial failure. Thus, the objective of the rebound of the entrepreneur is part of the reforms of the law of companies in difficulty for several years: introduction of professional recovery leading to the cancellation of debts, acceleration of the judicial liquidation procedure, limitation of the scope of the guarantees offered to creditors and reduction of the weight of sanctions. Beyond the measures, the evolution of the law of companies in difficulty reflects a real mutation in the French perception of entrepreneurial failure. A paradigm shift is taking place where the culture of failure gradually gives way to a culture of rebound, so that the entrepreneur can be entitled to a "second chance". The article focuses on the legal mechanisms of the rebound of the individual entrepreneur after a judicial liquidation under French law. The objective is to demonstrate that a paradigm shift is taking place where the culture of failure is gradually giving way to a culture of rebound. If the change has appeared for 30 years, it appears more blatantly for 3 years, whether in European or French law. However, many economic stigmas persist, such as indicators in the banking file of companies or data on judicial liquidation that remain publicly available. In order to promote the rebound of the entrepreneur, we propose in particular the establishment of a right to be forgotten.

Making History, Making Worlds

Making History, Making Worlds Robin D. G. Kelley (bio) In a way, the obsessions that drove me into and then rapidly away from drama were those most beautifully summarized in a few thoughts of Marx: by mixing our labor with the earth, we change the external world and thereby change our own nature. That's what drama is; that's what geography is: making history, making worlds. —Ruth Wilson Gilmore, "What Is to Be Done" (2022) Ruth Wilson Gilmore's Abolition Geography: Essays towards Liberation contains many definitions of abolition, all of which are incisive, insightful, profound, and equally valuable. They represent an accretion of ideas produced from a lifetime of intellectual work and organized struggle, flashes of which appear in three decades of collected writing. In an interview for the Intercept not included in the book but quoted in the introduction by its editors, Brenna Bhandar and Alberto Toscano, Gilmore insists, "Abolition has to be 'green.' It has to take seriously the problem of environmental harm, environmental racism, and environmental degradation. To be 'green' it has to be 'red.' It has to figure out ways to generalize the resources needed for well-being for the most vulnerable people in our community, which then will extend to all people. And to do that, to be "green" and "red," it has to be international."1 A month after the Intercept published this interview, Gilmore further elaborated on the meaning of abolition in an email to me: "I think really hard about defining abolition. To me, it's an elaboration (not novel but distinctive) of small-c communism, without a party though I wish we had party discipline. … I'm a Leninist in the sense that I do believe we can prevail with a combination of "the Soviets plus electricity." What is that 100 years on? For one thing, its groupings wherever they struggle fighting to redistribute material and symbolic resources." In other words, abolition begins and ends with "groupings" of people struggling to end the stranglehold of racial capitalism on the earth and all of its life forms, and build a sustainable, equitable, and ethical world for all. Building is the keyword. Abolition is less an act of demolition than a construction project. It is creative creation, the boundless and boundary-less struggle to make our collective lives better, what she calls "life in rehearsal." As she told Clement Petitjean in an interview: "Abolition is: figuring out how to work with people [End Page 383] to make something rather than figuring out how to erase something … Abolition is a theory of change, it's a theory of social life. It's about making things."3 To illustrate her point, she turns to W. E. B. Du Bois's classic Black Reconstruction in America (1935), which not only showed "how slavery ended through the actions and organized activity of the slaves" but that the legal abolition of slavery "doesn't tell you anything about the next day, what the next day, and days thereafter, looked like during the revolutionary period of radical Reconstruction." In other words, freedom was not an event, nor was it "given." It had to be made. Her invocation of Black Reconstruction was very deliberate. It is the story of groupings of people once regarded as chattel "making history, making worlds," transforming property relations, organizing to redistribute material and symbolic resources, and changing themselves in the process. Drama, indeed. Du Bois called it "the most magnificent drama in the last thousand years of human history. … the finest effort to achieve democracy for the working millions which this world had ever seen."4 He defined their vision and practice of freedom as "abolition democracy," the determined struggle to destroy all vestiges of slavery and rebuild the country into the democracy it never was. Their vision derived not from Marx or Engels but from the Old Testament idea of Jubilee. Its principles are expressed in Leviticus chapter 25 and Isaiah 61, which calls for the cancellation of debts, restitution of land, freeing of all slaves, which entails "to proclaim liberty to the captives and release to those in prison." Jubilee marked a new beginning, a clearing intended for building the new...

A COMMENT ON THE US STUDENT LOAN SITUATION FROM A POST-KEYNESIAN PERSPECTIVE

This paper aims to contribute to the debate on the US student debt situation. First, it highlights the determination of labor earnings and economic activity as a function of macroeconomic conditions and the relevance of considering this endogeneity to analyzing student debt sustainability. Next, I present a background on student loans and the labor market in the US. Moreover, using a Minskyian framework, I argue that the current student debt situation can have adverse results on economic activity, although not leading to financial instability. Last, I comment on the student debt cancellation debate, proposing alternative policies with more progressive and lasting effects.

Загрози фінансовій безпеці України

Abstract. Introduction. In the conditions of deepening financial instability of our country, increasing threats to all levels of security, it is important to constantly analyze the values of the main indicators of the country's financial security and identify potential threats, since in order to implement effective mechanisms for stabilizing the financial system, it is necessary to dynamically assess the most dangerous risks for its functioning. Purpose. The purpose of the study is to identify and analyze potential threats to the country's financial security before and after a full-scale invasion of the Russian Federation through a system of indicators. Results. Based on the analysis of changes in the country's financial security indicators for the period before and after the beginning of the full-scale invasion of the Russian Federation, dangerous zones and threats to the state's financial security were identified: the debt burden on the state budget, the level of inflation, lending by banks to the real sector of the economy, the dependence of the banking system on foreign capital and the level doubtful debt in the credit portfolio of banks. The situation is related to a full-scale war and forces Ukraine to build up debt to finance hostilities and solve important social issues in conditions of uncertainty, which in the long run, without the possibility of debt cancellation, will have a disincentive effect on the economy. The safe zone includes the share of domestic state loan bonds and international reserves. The forecast of indicators of financial security that were in the critical zone for 2023, using analytical alignment of the dynamic series, demonstrated the deterioration of the values of these indicators. Conclusions. 2022 is expected to be a critical year for most indicators of the country's financial security. It is proposed to implement transformational measures that would take into account the changes taking place in the market of financial services due to the emergence of problems, first of all, resource provision. It is recommended to regulate the regulatory and legal field regarding financial security during martial law and detailing the threats that arose during the war.

The political benefits of student loan debt relief

Are people likely to reward politicians who support canceling student loan debt? This paper draws on original conjoint and survey experimental data to assess the effects of student debt relief proposals on voter behavior. Using data collected 3 months prior to Biden’s announcement of a specific plan for broad-based student debt relief, the paper addresses two interrelated questions: How do policy details—such as eligibility restrictions and the amount of debt canceled—shape voter support for candidates who embrace student loan cancellation? And second, will executive action by President Biden increase Democrats’ chances of winning in 2022 or 2024? We find evidence to suggest that candidates who support student debt relief plans offering generous debt cancellation while minimizing eligibility restrictions get the largest boost in support from voters, especially for key Democratic constituencies. We also find that executive action on student debt increases the likelihood that key groups would support Democratic congressional candidates in upcoming electoral contests. These results offer the first systematic evidence exploring the potential political ramifications of enacting student debt relief.

Податкове регулювання будівельного сектору житлової нерухомості

The purpose of the article is to study the theoretical aspects of tax regulation and its role in the system of state regulation of the construction sector of residential real estate. The article examines the theoretical foundations of tax regulation, defines its levers, and tools, and considers the general characteristics of the mechanism of their influence on economic processes. State regulation with the help of tax measures is a complex mechanism that combines various tax levers that affect obtaining positive financial and economic results of business entities, meeting the needs of society, and increasing investment motivation. The use of taxation in the system of state regulation takes place based on relationships between subjects that operate in the market and as a result push for changes. Quite a variety of factors that create conditions for the application of tax regulators.
 The thesis is proved that the tax regulation of the development of the construction sector of residential real estate in Ukraine should be implemented through the provision of tax payment preferences. Tax benefits are the main form of tax incentives. The main types of tax benefits are considered and summarized, namely full or partial exemption from paying taxes; tax discounts by destinations, objects, and payers; differentiation of tax rates; postponement of payment or cancellation of debt; tax investment credit.
 It is noted that the promotion of the development of economic processes should be correlated with tax regulators, who will be able to act as a driving force for the activation of the construction industry while emphasizing the role of taxation in the reproductive process and in the creation of a public product. The importance of state tax regulation for the effective development of the construction sector of residential real estate in Ukraine is determined by the fact that the management of tax processes is carried out at different levels, because of which there is a need to regulate the system of connections and relations in all links and at all levels. Based on the results of the study, it is proposed to use tax incentives of an innovative and investment nature as a tax instrument of state support.

Subsidizing: some issues of property stability of the enterprise

The goal is to assess the dynamics of the volumes of state subsidies received by an agricultural enterprise and results of its production and financial activities. Methods – based on the use of statistical, economic and comparative analysis, the sizes of subsidizing economic entities in crop industry are considered. Results – indicators of grain production were studied, their cost price was analyzed in the context of elements and cost items, sales prices and financial condition, volume of subsidies is unstable over the years. It was revealed that the enterprise, receiving significant amounts of public support from year to year, does not have an adequate growth in crop production. The unilateral nature of public support is also noted, which is largely directed to crop producers. Changes in gross and net profits are determined, the value of which fluctuates significantly over the years, and decrease in production parameters leads to reduction in their size and reduces financial activity of entrepreneurs. Conclusions – the improvement of support measures, this is, first of all, increase in its size, as well as debt cancellation on short-term loans or their deferment, and reducing interest rates on long-term loans. The proposed approaches are designed to create favorable conditions for introduction of advanced equipment and technologies into the farms, use of the most productive seed material, means of protection and fertilizers, increasing the level of environmental safety of agricultural production, as well as improving fertility and quality of soils occupied by grain, leguminous and fodder crops. To assess the effectiveness of allocated subsidies, it is necessary to determine the specific result of their spending as accurately as possible. Agricultural policy, anti-crisis measures ensure the sustainable development of domestic agro-industrial complex.

Debt Cancellation to Avert Fiscal Austerity: Helpful Beyond Controversy?

ABSTRACT In 2021, a group of economists launched a proposal asking for the write-off of the public debt built-up in the ECB’s balance sheet and an increase in public spending for a similar amount. This proposal generated strong criticism, which can be organized into three blocks: (i) debt relief occurs when a central bank purchases public debt, and its cancellation does not improve the situation faced by governments; (ii) the proposal is grounded in an erroneous concept of ‘fiscal space’, and there are better alternatives for the financing of public spending; (iii) the proposal would be counterproductive or illegal. This article rebuts those criticisms, finding the plan helpful to avoid a return to fiscal austerity. More specifically, debt cancellation makes quantitative easing, the unconventional monetary policy that justified the purchase of public debt, irreversible whilst simultaneously increasing the fiscal space of Eurozone Member States. Finally, and most relevant, the proposal includes a specific commitment to an increase in public spending.

A Comparative Analysis of External Debt in the East African Community Countries

Borrowing to finance public infrastructure has pushed debt levels to record highs within the East African Community (EAC) countries. Total external debt stock grew by 333.38 percent between 1970 and 2020. The rise in external debt exceeded growth in GDP and exports in all the countries except for the Democratic Republic of Congo between 2010 and 2020. The situation could have been worse had it not been for a massive external debt cancellation by the international community under the Heavily Indebted Poor Countries (HIPC) and Multilateral Debt Relief Initiative (MDRI) programmes that benefitted all the EAC countries except Kenya. Virtually all the countries are increasingly borrowing more long-term than short-term external loans. Multilateral and official bilateral creditors continue to be the major financiers in all the countries even though these countries are gradually diversifying their sources of borrowing. All the EAC countries except Burundi had publicly guaranteed private sector external debt from commercial banks between 2010 and 2020. Three of the countries, Kenya, Tanzania and Rwanda, had nonguaranteed private sector external debt during the period. Two countries, Kenya and Rwanda, have joined a fast growing number of African countries that are issuing international sovereign bonds. The EAC countries are in a vulnerable position, with public external debt already at elevated levels. Trends in some of the external debt ratios including debt-to GDP, debt-to-exports, and debt service-to-exports ratios suggest that these countries could face challenges in servicing their external debts and meeting other foreign exchange obligations. High levels of external debt seem to have led to a vicious cycle of debt. Even after benefitting from the HIPC and MDRI debt relief programmes, the countries are once again facing high debt ratios. In light of the above findings, governments of the EAC countries should: look for improved terms on new loans; restructure external commercial loans that have heavy maturities and high interest rates; continue to diversify sources of external financing to reduce high dependency on expensive loans; make concerted efforts to increase concessional public external debt; explore non-debt creating financing options for public investments such as Public Private Partnerships; and look into refinancing expensive debt with debt on more favourable terms. Keywords : External debt, multilateral and bilateral debt, publicly guaranteed debt, external debt indicators, vicious cycle of debt DOI: 10.7176/JESD/14-4-01 Publication date: February 28 th 2023

Student debt incidence: recent data and conceptual issues

Abstract: In recent years, the rising level of student debt has led to calls for increased government assistance in the form of partial or full student debt cancellation. In this Commentary, we use the 2019 Survey of Consumer Finances (SCF) to study the incidence of student debt and cancellation benefits along quantiles of household income, net worth, and our estimate of lifetime wealth. We show that student debt is highly concentrated among households with low net worth, but much more evenly distributed across income and lifetime wealth. We then highlight several challenges in using such statistics to draw conclusions about whether cancellation will ultimately increase or decrease inequality in lifetime wealth, and we outline open questions for future research. Replication materials for this Commentary may be found at https://github.com/tphelanECON/student_debt_SCF

The distributional effects of student loan forgiveness

We study the distributional consequences of student debt forgiveness in present value terms, accounting for differences in repayment behavior across the earnings distribution. Full or partial forgiveness is regressive because high earners took larger loans, but also because, for low earners, balances greatly overstate the benefits of debt cancellation. Consequently, forgiveness would benefit the top decile as much as the bottom three deciles combined. Enrolling households who would benefit from income-driven repayment is less expensive and distributes more funds to lower-income households.