Kazakhstan Bank Debts
Kazakhstan, located in Central Asia, has implemented a program to help nearly 500,000 citizens get out of bank debts. The program started in June 2019 and will cost over $274 million to execute. President Kassym-Jomart Tokayev hopes that by forgiving bad loans given out by the country’s banks, Kazakhstan’s bank debts will decrease, releasing some of the strain on the economy. This policy will also help increase business in the banking sector of the economy, opening up more jobs for individuals below the poverty line.

4 Facts About Kazakhstan Bank Debts

  1. Kazakhstan’s economy has fallen in recent years. The country’s economic system rated 59 overall in 2019. The country has fallen by 3.7 points in the past few years and this is because of a steep decrease in its fiscal health. The unemployment rate is at 4.9 percent and the annual GDP is $477.6 billion. However, the economy’s fiscal health has faced a sharp decline. Over the past year, the country’s financial stability has steadily decreased due to poor working environments and high prices on goods. The country’s goal is to reduce Kazakhstan’s bank debts and increase financial security.

  2. Private banks caused the bank debts. One-sixth of Kazakhstan’s population holds bad loans written by private banks. Bank bailouts have been occurring in the country for a decade. The government provides at least $18 billion in private banks to keep their businesses running. Since Tokayev’s election in June 2019, he has introduced a policy to stop bank bailouts that the government provided.

  3. This is not necessarily a bad thing for poverty. Although the citizens holding bank debts may be living under the poverty line, the government’s forgiveness is a positive change. By ending Kazakhstan’s bank debts, the country’s monetary freedom should increase. Although this freedom grew in 2019, there is still plenty of room for growth. In 2018, 4.3 percent of the population lived below the poverty line. The debt release policy will help alleviate the debts of about 18 million people. About 500,000 people cannot manage their debts because of bank loans. The loan forgiveness policy will help individuals get rid of their debts so they can spend more money on essentials. By forgiving the loans, the country hopes to balance its economy. This will help individuals escape the poverty line, both through their lack of debts and through pay increases.

  4. The debt forgiveness policy is based on the amount owed. According to Kazakhstan’s president, Kassym-Jomart Tokayev, individuals with up to $800 of debt will have it forgiven completely. Individuals with over $800 will have $800 erased from their debt. This will help individuals like Anara Ryskulova, who has four small children and only makes $400 a month. Because of her low income, Ryskulova is dependent on credit and loans to provide for her family and pay her rent.

Since his election in June 2019, President Kassym-Jomart Tokayev has implemented a policy to stop bank bailouts. For a decade, the Kazakhstan government has been bailing out privately owned banks. The policy will not only increase the banking sector of the government but will also help the individuals who live below the poverty line. By decreasing the bank debts, affected individuals will have more money for essentials. By implementing this policy, Kazakhstan’s president will not only increase the country’s GDP but ultimately, help the citizens live above the poverty line.

Destinee Smethers
Photo: Flickr

Hurricane ResilienceHurricane Dorian is the latest in a long series of hurricanes that have hit the Caribbean — impacting the Bahamas the worst. Initial reports from the U.N. estimated that nearly 70,000 people were in need of food, water and shelter in the archipelago and that around 30 people had died as a result of the hurricane.

For the estimated 10 percent of the population of the Bahamas who live below the poverty line, recovering from natural disasters such as this is a particular challenge. As a result, there is a massive need for programs that not only address the short-term impacts of hurricanes but also focus on the importance of long-term hurricane resilience.

The Caribbean Development Bank (CDB), based in Barbados, has pledged to provide $1 million in aid to the Bahamas, with $700,000 in the form of a loan and the remaining $300,000 as a grant. While disaster relief helps improve recovery for local economies and minimize the impact for impoverished communities, there are also other avenues of aid that the CDB could pursue which take the form of mental health programs and debt repayment plans.

Mental Health

As a part of the Stronger Together campaign, in collaboration with the Pan-American Health Organization, the CDB has also placed an increased focus on addressing the negative mental health impacts of hurricanes — which traditionally get little attention. However, this type of support is key to help uplift those who experience the trauma of losing their homes or worse, their loved ones.

The campaign, launched in July 2019, aims to train 16 new mental health service professionals, ranging from psychologists to social workers to promote resilience in the face of natural disasters. This program could have a major impact on helping people in the Bahamas recover, while also offering a path towards future mental resilience in the event of another damaging hurricane. This is especially valuable for communities living in poverty.

Debt Repayment

High levels of debt are a substantial impediment to the massive discretionary spending needed to successfully recover from a hurricane, as nations are often forced to choose between allocating resources towards serving the immediate needs of their citizens or maintaining their current repayment plans. As such, a debt relief program could prove incredibly beneficial in the Bahamas, as the country had a debt burden of $8.2 billion prior to the events of Hurricane Dorian.

There is already precedent for the CDB to offer debt restructuring opportunities. For instance, following Hurricane Ivan, Grenada was able to re-negotiate its debt repayment plan to cease repayment following a natural disaster. Some have argued that this program should be extended to all nations in the event of a natural disaster.

This would help to reduce an unsustainable reliance on foreign aid, as nations find themselves falling deeper into debt and failing to provide adequate assistance to their own citizens. Not only do such increases in debt leave countries less prepared for another similar natural disaster, but they also limit the amount of aid which governments can extend to the citizens facing the most significant damages as a result of the disasters.


While the recent pledge of $1 million in aid to the Bahamas by the CDB is a useful step in mitigating the impact of Hurricane Dorian, the CDB also has several other methods of improving not only hurricane recovery but also hurricane resilience. With investment in the mental health field, the CDB is working to train mental health services professionals who can provide psychological support to citizens. This could be supplemented by a re-negotiated debt repayment plan for the Bahamas, with many arguing that such a program would reduce the financial burden placed on the Bahamas by the need to take more loans.

Alexander Sherman
Photo: Flickr

fresh start
For the past six years Croatia has been struggling to pull itself out of a severe economic downturn, one of the worst in the EU. The country’s unemployment rate stands at close to 20 percent, the average salary is just $852 a month and the country’s credit rating is below investment grade. Economic growth for 2015 is expected to be less than one percent.

In an effort to combat the crisis, the government has instituted a new program, known as “Fresh Start,” cancelling the debts of the country’s poor. The program is available to all Croatians who live below the poverty line of $138 a month and do not owe more than $5,100 in debt. In total it is estimated that 60,000 Croats can expect debt relief, and 20,000 have already applied.

The government hopes and argues that by cancelling the debt of its poorest citizens it will alleviate poverty and boost the country’s economy. Without the burden of debt repayments draining peoples’ finances, supporters of the program argue that it will enable the poor to spend more on basic necessities and that this increase in spending will help to pull the country out of the recession.

But the program is not without critics. Some argue that it will make little difference in the long run and that beneficiaries will simply end up back in debt with very high premiums, assuming they can secure new loans at all. Other critics argue that the program is a short term solution that fails to tackle long term problems contributing to the recession and fails to create jobs or provide other means to lift people out of poverty.

Then there are other critics who argue that the program does not go far enough as it fails to help those who owe more than $5,100 or earn more than $138 a month. Many applicants have been turned away for owing too much money. Many others who earn too much to qualify still live in poverty and struggle with financial hardships caused by the burden of repaying debt to creditors.

Many critics also see this as an effort by the government to win votes in the upcoming elections set for later this year. But whatever the motivations behind Fresh Start, the real question is whether it will work. The government was successful at convincing the country’s top private and public sector creditors to agree to the program, which is expected to wipe out one to seven percent of Croatians’ debts. This in turn is expected to free close to 20 percent of Croatian debtors.

There is an ongoing debate about both the effectiveness and morality of debt relief. There are numerous organizations lobbying for debt relief to the poor both at home and abroad and numerous other groups opposed to it. But in Croatia, the idea is now being put to the test.

– Matt Lesso

Sources: Mic Network, The Financial Times, Washington Post, New York Times, RTE Dublin
Photo: Panteres

debt crisis
For the second time in 13 years, and the eighth time in its national history, Argentina is defaulting on internationally held bond payments. The default has been accompanied by negotiations in New York between Argentina’s economy minister, Axel Kicillof, and U.S. bond holders, raising considerable disagreement concerning hedge funds, external bonds and what the word “default” actually means.

No agreement has yet been reached, and the Republic of Argentina is now considered to be in selective default, having failed to pay interest on some of its debt.

Attorney Daniel Pollack, the court-appointed mediator during the proceedings in New York, outlines what this means for the various parties involved:

“Default is not a mere ‘technical’ condition, but rather a real and painful event that will hurt real people: these include all ordinary Argentine citizens, the exchange bondholders (who will not receive their interest) and the holdouts (who will not receive payment of the judgments they obtained in court).”

Pollack goes on to observe that “the full consequences of default are not predictable, but they certainly are not positive.”

These economic decisions made by South America’s third largest country certainly have noticeable effects on the pockets of its citizenry.

Argentina’s 2001 default involving $95 billion worth of failed payments on internationally-held debt triggered a nationwide recession and sparked deadly violence. It was during this period of economic hardship that cartoneros started filling the streets of Argentina’s cities.

The cartoneros spend their days pulling large carts through city streets, collecting paper, cardboard, glass and other recyclable materials. Each evening they exchange their harvest at a wholesaler, receiving 6 pesos, equal to about 75 cents, for every 10 kilograms of material they collect.

The cartoneros have become a symbol of economic crisis in Argentina. Their presence is a reminder that the country’s national debt crisis does have consequences for its citizens – in the case of Argentina, financial blows over the past two decades have cast many middle class families into poverty and made life even harder for those already struggling to make ends meet.

Kayla Strickland

Sources: Deutsche Welle, Financial Times, Business Week, Business Week 2
Photo: Treehugger

loan debt
Fear not, American undergraduates. While we may have the single most expensive higher educational system in the developed world, students from all over are still accruing debt. You may have heard the statistics, or suffer from them personally: American student loan debt has rocketed to more than $1 trillion, and more than 7 million borrowers are currently in default. Yet, students from all over the world, from Japan to Britain, are also raking up expensive debt to receive an education.

While public university tuition is free in countries like Argentina, Iceland, Norway and Sweden, this does not always mean students finish their education with zero debt. In 2012, approximately 900,000 Swedish students received help from the government, totaling close to 22 billion krona (roughly $3.5 billion). Two-thirds of those funds were loans.

The average student loan debt for the U.K. is between €12,360 and €12,850, where more than 93 percent of students have received some form of financial assistance, accruing debt in the process. The country has even seen a staggering rise in suicide rates as a result of its student debt crisis. Between 2007 and 2011, the number rose to a devastating 50 percent.

In China, average tuition runs at about ¥40,000 annually, though the average family only makes about ¥3,000 per year. Japan, too, is saddled with increasing student loan problems. Between 2001 and 2011, the number of students applying for loans jumped to 70 percent, and 60 percent of its graduating student population since 2009 has been left underemployed or unemployed altogether.

While the United States’ position on student loan debt far surpasses the rest of the world, the global severity of the situation should not be overlooked. In the 21st century, the economy has become global-if one country is hurting, other countries will be affected, too. As student loan debt manages to climb, one can only hope the institutional problem will be fixed sooner, rather than later.

– Nick Magnanti

Sources: Huffington Post, Collegestats.org, Tuition.io
Photo: Boston

Since those in extreme poverty have no line of credit (in some cases they have no state records whatsoever), they are sometimes forced to turn to loan sharks for quick cash. These loan sharks operate outside of the law and when it comes to payment, they have no mercy, often leaving the borrower in worse conditions than before the transaction.

In South Africa, this debt cycle has affected the poorest population. In the Johannesburg slum, Alexandra, loan sharks are easier to find than a job or sanitary facilities. Taking advantage of a desperate and uneducated population, loan sharks are able to make huge profits. As one Alexandra resident explains, the loan sharks hold identification cards as collateral and when their “customers” are unable to repay their loans, the ID cards are sold to refugees and emigrants from other parts of Africa.

With 18% of South Africans in debt (on record, not including those indebted to loan sharks), the World Bank is supporting a new strategy to reach and educate the public. Referred to as education entertainment, social issues are embedded into the existing storyline of a television show until the characters, and the viewers, are eventually guided to a solution. Rather than blatantly tell people what they should do- which is likely to meet resistance- advice is subtle and portrayed in the context of everyday life. Viewers are already familiar with the characters, and with the added appeal of emotion, soap operas serve as an ideal platform for credible information.

Scandal, one such show, reaches 3 million viewers in Johannesburg nightly, and its target audience is the low income population. This show has already tackled the issue of debt, with one character finding herself in a predicament then gathering information and arriving at a solution. Not only did the string of episodes warn of the negative consequences of debt, but the telephone number for a debt consolidation hotline was also displayed on screen. Following the debt-focused episodes, and for some time after, calls into the debt hotline increased 300%.

Although criticized for being overdramatic and unrealistic, soap operas have now become a resource for those struggling with poverty and other social issues. Soap Operas are a popular genre and the more viewers tune in, the more they empathize and relate to the characters on the show. By embedding useful information into soap operas, it is possible to educate an entire population without disturbing their nightly routine. Social issues associated with poverty can be combated with love triangles and scandals, thanks to education entertainment.

– Alessandra Luppi

Sources: World Bank, World Bank Blog

Originally an NGO formed in 1997, SKS Finance became a for profit company in 2005 when it was incorporated as an non-banking finance company (NBFC). Its mission is to provide low-income households with financial services, primarily in India, but potentially across the globe. Here are five facts about the company:

1. The company’s goal is to use microfinance as a tool for reducing poverty and increasing economic opportunity by providing access to insurance and credit. Loans start at about Rs. 2,000 to Rs. 12,000, or about $44-$260. These loans are typically given to poor women in order to help them expand their businesses. Poor women act as guarantors on each other’s loans, using a group lending model. According to SKS Finance, the loans are collateral-free and have a 99% repayment rate.

2. A variety of financial companies including Axis Bank, Barclays, BNP Paribas, CitiBank, HSBC, South Indian Bank, and ING Bank Vysvya have invested in and partnered with SKS Finance.

3. SKS Finance core values are: customer first, ethics always, and consistent quality. This involves transparency with customers, not offering bribes, and fostering innovation without cutting corners. Currently, the company is in the process of rebranding itself. SKS Finance is focusing on removing ambiguities about the company rather than making many specific changes. This need for rebranding came after founder Vikram Akula’s departure from the company and the upheaval that came with legislation passed in 2010. In the recent legislation, the Andhra Pradesh government sought to regulate the micro finance sector’s practices in terms of loan recovery and interest rate charges.

4. As of June 30 of this year, SKS has 51 LAKHS, and 1255 branches in India. The company has helped people like Ameena Bi set up a small mattress selling shop with her husband and a flower shop with the aid of her father. Currently Ameena earns INR 300 or $6 a day and her husband, Abdul, earns between INR 300 and INR 400, or $8.50, a day, whereas just three years before they were making INR 120 or $2 a day.

5. In 2011, Vikram Akula, the founder of SKS Microfinance, left the company amidst much turmoil. In hopes of an impending return, Akula suggested in September that the company had lost its way again. His statements were similar to the narrative that forced his departure two years ago. While current leadership at SKS is more than reluctant to give Akula any role in the company, he has ties with Biksham Gujja, chairperson of SKS Trust. SKS Trust, the largest shareholders in SKS Finance, nominated Akula for the seat now in dispute. SKS Trust is meant to serve SKS borrowers and acts as the largest shareholder in the company. Various people in the company have different attitudes regarding Akula’s possible return. Some say Akula has not made any attempts to return on his own, others that he has no support, and still others believe Akula’s actions are hostile in nature. Some have said there is a lot of support for Akula, otherwise he wouldn’t have received SKS Trust’s nomination. The effect of this public squabbling on SKS borrowers has yet to be fully realized, but doubts are being raised, especially by those worried about the interests of SKS Finance’s beneficiaries.

– The Borgen Project

Sources: SKS India, Business Standard, Economic Times, Times of India
Photo: Hugedatabase.net


Grenada, a small Caribbean island with a population of 105,000, just might be changing the world. The nation is negotiating an unprecedented debt-relief program with its creditors around the world, and their decisions could define a new standard of debt-freedom for billions of people.

Small Economy, Big Problems

After a socialist coup and U.S. invasion in the 1980’s, the island nation has struggled to sustain itself. Revenue from its current biggest export, nutmeg, hardly matches its economic struggles. A US-EU banana trade war in the 90’s eliminated its biggest source of income, hurricanes Ivan and Emily ravaged its homes and infrastructure in 2004 and 2005, and tourism has plummeted since the 2008 recession. Unemployment has reached 30%, and there is no end in sight.

To prop up its deteriorating economy, Grenada has borrowed substantial sums from private bondholders, governments, and multilateral institutions like the World Bank and International Monetary Fund. Unfortunately, the assistance failed to properly kickstart the economy, and now those creditors are calling in their debts—debts that almost exceed Grenada’s gross national income. Last March, Grenada defaulted on most of its payments, and more are due this month. But a new Grenadian organization is rethinking the nation’s approach.

The Jubilee

Grenada’s Conference of Churches (CCG) is calling for a “Jubilee”—a radical reduction of Grenada’s 1 billion dollar debt. Inspired by the biblical concept of debt forgiveness in Leviticus 25, the CCG is recommending a debt restructuring based on the World Bank’s Heavily Indebted Poor Countries Initiative, independent mediation by sympathetic nations like Norway and Germany, and budget readjustment so that debt relief funds economic development in-country.

“While the obligation to repay loans must be acknowledged,” their statement reads, “the governments of small nations are not helpless at the mercy of their creditors.” The CCG’s response has invigorated Jubilee advocacy networks across the globe, and international support for their cause is growing. Other Caribbean countries have negotiated debt restructures, such as Belize’s 10-20% debt reduction earlier this year, but Grenada’s look to be the precedent for radical debt reform. Their negotiations have implications for billions of people living in indebted countries throughout the developing world.

Whatever happens, Grenada’s creditors are looking at inevitable losses. “They may initially take a tough line, but Grenada always has the option simply to sit it out,” an anonymous source said, “Recovery through litigation is unlikely to be a serious proposition for bondholders.”

– John Mahon

Source: The Guardian, Financial Times, Now Grenada
Photo: Marsh Analytics