Jonas B. Bunte
- Published in print:
- 2019
- Published Online:
- February 2019
- ISBN:
- 9780190866167
- eISBN:
- 9780190909581
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780190866167.003.0006
- Subject:
- Political Science, Political Economy, International Relations and Politics
A Consumer Coalition characterizes Peru. Labor and domestic Finance dominate the political landscape, while domestic Industry is relatively weak as a result of the economic crisis in the 1990s. ...
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A Consumer Coalition characterizes Peru. Labor and domestic Finance dominate the political landscape, while domestic Industry is relatively weak as a result of the economic crisis in the 1990s. Interviews reveal that both Labor and Finance prefer bilateral loans from Western governments. While Labor is less enthusiastic about private creditors than Finance, recent experiences with hyperinflation resulted in congruent preferences regarding this creditor as well. Qualitative evidence shows that Peruvian politicians are acutely aware of the need to satisfy the demands by local banks as well as the general population. Interviews suggest that politicians have much influence over the process of making borrowing decisions, allowing them to significantly shape the borrowing strategy. As a result, Peru relies more on bilateral loans from Western governments than its neighboring countries. It also uses private creditors, while loan offers by the Chinese government are rejected.Less
A Consumer Coalition characterizes Peru. Labor and domestic Finance dominate the political landscape, while domestic Industry is relatively weak as a result of the economic crisis in the 1990s. Interviews reveal that both Labor and Finance prefer bilateral loans from Western governments. While Labor is less enthusiastic about private creditors than Finance, recent experiences with hyperinflation resulted in congruent preferences regarding this creditor as well. Qualitative evidence shows that Peruvian politicians are acutely aware of the need to satisfy the demands by local banks as well as the general population. Interviews suggest that politicians have much influence over the process of making borrowing decisions, allowing them to significantly shape the borrowing strategy. As a result, Peru relies more on bilateral loans from Western governments than its neighboring countries. It also uses private creditors, while loan offers by the Chinese government are rejected.
Jonas B. Bunte
- Published in print:
- 2019
- Published Online:
- February 2019
- ISBN:
- 9780190866167
- eISBN:
- 9780190909581
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780190866167.001.0001
- Subject:
- Political Science, Political Economy, International Relations and Politics
Governments frequently borrow money. It is often assumed that it is creditors, and creditors alone, who determine what loans developing countries obtain. Yet this is only partially true: the data ...
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Governments frequently borrow money. It is often assumed that it is creditors, and creditors alone, who determine what loans developing countries obtain. Yet this is only partially true: the data show that countries with the same credit rating, income levels, and degree of democracy exhibit a remarkable diversity in the types of creditors used. Some borrow from China, while others turn to the United States; some borrow from private investors, while others rely on multilateral institutions. Apparently, developing countries have some choice. Developing countries are not merely passive recipients gobbling up whatever loans they can get, but active agents. This book systematically explains how governments choose among competing loan offers. The argument focuses on societal interest groups in recipient countries and the distributional consequences of external loans. For example, China and the International Monetary Fund might both offer the same loan volume, but the strings attached to the loans differ. As a result, domestic interest groups would benefit from one loan but not the other. Governments then cater to whichever domestic interest group coalition dominates by borrowing from that coalition’s preferred creditor. Interviews with decision-makers in Ecuador, Peru, and Colombia provide strong evidence that domestic politics shape borrowing decisions. A Statistical analyses confirms that borrowing portfolios around the world reflect the relative strength of societal interest groups. Understanding why certain loans are chosen is critical for gaining insights into the effects these loans might have on growth and democracy.Less
Governments frequently borrow money. It is often assumed that it is creditors, and creditors alone, who determine what loans developing countries obtain. Yet this is only partially true: the data show that countries with the same credit rating, income levels, and degree of democracy exhibit a remarkable diversity in the types of creditors used. Some borrow from China, while others turn to the United States; some borrow from private investors, while others rely on multilateral institutions. Apparently, developing countries have some choice. Developing countries are not merely passive recipients gobbling up whatever loans they can get, but active agents. This book systematically explains how governments choose among competing loan offers. The argument focuses on societal interest groups in recipient countries and the distributional consequences of external loans. For example, China and the International Monetary Fund might both offer the same loan volume, but the strings attached to the loans differ. As a result, domestic interest groups would benefit from one loan but not the other. Governments then cater to whichever domestic interest group coalition dominates by borrowing from that coalition’s preferred creditor. Interviews with decision-makers in Ecuador, Peru, and Colombia provide strong evidence that domestic politics shape borrowing decisions. A Statistical analyses confirms that borrowing portfolios around the world reflect the relative strength of societal interest groups. Understanding why certain loans are chosen is critical for gaining insights into the effects these loans might have on growth and democracy.
Jean Pisani-Ferry
- Published in print:
- 2014
- Published Online:
- May 2014
- ISBN:
- 9780199993338
- eISBN:
- 9780199346400
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199993338.003.0011
- Subject:
- Economics and Finance, Financial Economics
Seven months passed between George Papandreou’s revelations on the sorry state of Greece’s public finances, and the agreement of European leaders on a tentative solution. By then the spread between ...
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Seven months passed between George Papandreou’s revelations on the sorry state of Greece’s public finances, and the agreement of European leaders on a tentative solution. By then the spread between Greek and German 10-year bonds had widened from 2 to 10 percentage points. Papandreou had tried to seek the help of the International Monetary Fund (IMF), whose Managing Director, Dominique Strauss-Kahn, had replied that no financial assistance could be provided without the prior consent of the other euro-area countries. But these countries, however, were extremely divided on the issue. They knew that Greece needed outside help, but remained reluctant to provide it. The fear of moral hazard, which the Maastricht Treaty had sought to banish with the no-bailout clause, and concerns of sliding towards a transfer union, explain some of this reluctance. After months of arduous negotiations, Europeans eventually declared that coordinated bilateral loans would be made available to Greece, complemented by IMF financing, but with conditions which were initially so harsh that the financial help they were offering was more like punishment than genuine assistance.Less
Seven months passed between George Papandreou’s revelations on the sorry state of Greece’s public finances, and the agreement of European leaders on a tentative solution. By then the spread between Greek and German 10-year bonds had widened from 2 to 10 percentage points. Papandreou had tried to seek the help of the International Monetary Fund (IMF), whose Managing Director, Dominique Strauss-Kahn, had replied that no financial assistance could be provided without the prior consent of the other euro-area countries. But these countries, however, were extremely divided on the issue. They knew that Greece needed outside help, but remained reluctant to provide it. The fear of moral hazard, which the Maastricht Treaty had sought to banish with the no-bailout clause, and concerns of sliding towards a transfer union, explain some of this reluctance. After months of arduous negotiations, Europeans eventually declared that coordinated bilateral loans would be made available to Greece, complemented by IMF financing, but with conditions which were initially so harsh that the financial help they were offering was more like punishment than genuine assistance.
