ADRIAN MA, HOST:
Being in financial debt can be debilitating. And maybe you know this firsthand, feeling like you can't escape the money you owe, watching the interest on your loans grow and grow and putting life plans on pause until you've got it under control - if that ever happens. This feeling of being burdened by debt, countries experience this too. When governments have a lot of debt, it often means they have less money to invest in things like health care, education or adapting to climate change. And while the consequences of these trade-offs are especially severe for poorer countries, they can also have global consequences. N'Dongo Samba Sylla is an economist based in Senegal. He recently wrote about what he calls the global debt crisis in Foreign Affairs magazine. When we spoke, he spelled out some of the consequences of this crisis.
N'DONGO SAMBA SYLLA: You could sacrifice generations in the sense that if you want to grow your economy, you have to invest, you know, in education, in health care to have healthier people and more educated people. But when you are in the position that you have to repay the debt by cutting, you know, on spending on health care and education, that means you will sacrifice a generation of people. For example, my generation, we went through that in the sense that in the 1980s, there had been a debt crisis across the Global South, and in Africa, the IMF asked our (ph) government to cut spending on education, health care. And when you are in low-income country context, in fact, you need the states to spend on, you know, education and health care because most of the household, they simply do have the means.
MA: You also point to this idea that governments that are forced to make this trade-off between debt and putting money towards things like education and health care - that has a disproportionate effect on women and children.
SYLLA: True - because generally, I mean, the women and children and also the rural persons are the most vulnerable, you know, to economic downturns. That's why whenever you have austerity policies, that will not be the elite who will suffer the brunt of these policies but ordinary people like women, like children and also people in rural settings because these groups, they are highly dependent on public spending. And whenever you have cuts in public spending, you can be sure that this most vulnerable group will suffer as a result.
MA: You know, I imagine that some people might be listening to this conversation and thinking that this sounds bad. But on the other hand, these countries did take out these loans, and they agreed to the terms - why shouldn't they be held accountable for what they owe? What would you say to that?
SYLLA: In fact, you know, the terms of the loans often are not fair. For example, there have been studies shown by economists which demonstrate that, for example, in the case of Africa, we are paying more interest than justified. But sometimes, for example, when you face, you know, climate shocks, I mean, no country in the Global South is responsible for climate shocks. This is a global problem. And to address that, you have to take loans. And if you take loans and you don't have objective capacity to repay, this is a global problem - that the debt crisis, as we showed in our paper, it's not an individual or regional problem.
MA: So you've laid out an argument for how creditors and debtors should do things differently. And you make this argument not just because it's an issue for these countries, low-income countries in the Global South, but you say that letting things go the way they're going is actually a threat to global stability. Why do you say that?
SYLLA: Yeah. It's a threat to global stability because if these countries become more vulnerable to climate shock, they could no longer invest, you know, in building their own domestic capacities. You see many young people trying to migrate, to go to Europe or to go to North America. Why - because they are affected by climate change? They say, yeah, we have no future in our countries, so now we have to go abroad because there's no opportunity here. You see? So all of these are, you know, impacts that you could see. And when you are in the settings where you have a lot of political instability, sometimes debt also could create a fertile ground for, you know, terrorist groups, you know, fundamentalist groups, etc. And these are not the kind of things that any society would wish.
MA: We've been speaking with N'Dongo Samba Sylla, who's an economist based in Senegal, and he's also coauthor of the piece "Shaking Off The Shackles Of Sovereign Debt: How Creditors And Debtors Can End A Global Crisis," which is in Foreign Affairs magazine this week. Thank you so much for taking the time to chat with us.
SYLLA: Thank you very much.
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