In view of the critical debt situation of African countries in the wake of the Covid-19 crisis, and of the longer-term ambition to deliver on the Sustainable Development Goals and the Paris Agreement, this discussion is more vital than ever. [...] According to estimates, Ecuador had to pay around US$700 million back in margin calls – effectively returning a large chunk of the US$1 billion repo loan much before the end of the four-year maturity of the repo loan – throughout the first three months of 2020, at the height of the Covid-19 pandemic. [...] As explained earlier in the case Although the flight to the safety of the most liquid of the ECB, the central bank’s haircut decisions sovereign – South Africa – is complicated in the work as a signal to private investors about the case of the African repo market by exchange rate perceived collateral riskiness of sovereign bonds. [...] High-income countries, the European Union in Instead, the “grand bargain” with private finance particular, have committed to put the greening provides the two carrots that the IIF letter of private finance at the core of low-carbon dangles in front of poor countries: the SDG transitions. [...] private investors make margin calls on the LSF, which has to send back collateral, such that the The Rethink approach takes seriously the broader value of the collateral portfolio it holds remains concerns with the bond-finance model that constant throughout the life of the repo loan.
- Pages
- 48
- Published in
- Germany
