The Third World Crisis

System of Public Debt Management in the

Philippines

Reforming the Third World Financial Systems

Manrie M. Mirasol LPT

Discussant
 The Third World Debt Crisis

Third world debt is the external debt that governments

in developing countries owe to foreign banks and
foreign governments.
 The 1980s and the 1990s

* 1980s, the world experienced a debt crisis in which highly

indebted Latin America and other developing regions were unable
to repay the debt, asking for help. 

* the 1990s crises were more staggered and sequential.

 Oil dollar recycling of the 1970s

* there were two "oil shocks" in which the world oil price
was greatly increased due to political and military reasons,
in 1973-74 and 1979-80.
 Causes of the Debt Crisis

* The legacy of colonialism

* Odious debt
* Mismanaged spending and lending by the West in the 1960s and
70s
the policy or practice of acquiring full or partial
political control over another country, occupying it
with settlers, and exploiting it economically.
Odious debt, also known as illegitimate debt, is when a
country's government misappropriates money it has
borrowed from another country. 
Insolvency versus Illiquidity
Insolvency means the borrower (or the
borrowing country) is unable to pay back,
both today and in the future.
Illiquidity means the borrower (or the borrowing
country) is unable to pay back now, but it can
pay back later.
Debt reduction has been delayed for many years
because governments have been unwilling to admit they
have made bad loans, and it is only pressure by Jubilee
2000 and other groups that has made the difference,
admits a former IMF and British Treasury insider in a
candid article in the prestigious journal Development
Policy Review (September 1999).
Jubilee 2000
 Banko Sentral ng Pilipinas
all government BSP staff examine the effects of
borrowing,
whether peso- these borrowings on monetary
or foreign
currencydenomi
aggregates, foreign exchange
nated, require reserves, the balance of payments
the approval of
the Monetary and the sustainability of external
Board. debt.
 Banko Sentral ng Pilipinas

BSP is not BSP has not engaged in quasi-fiscal

permitted to operations and unconventional
issue its monetary policies as practiced by a
own debt number of central banks in advanced
securities. economies.
 Quasi-fiscal activities are
Unconventional monetary
any activities undertaken by state-
policy occurs when tools other than
owned banks and enterprises, and
changing a policy interest rate are
some- times by private sector
used. These tools include: negative
companies at the direction of the
interest rates. extended liquidity
government, where the prices
operations. asset purchases
charged are less than usual or less
(quantitative easing)
than the “market rate.”
https://www.grips.ac.jp/teacher/oono/hp/lecture_F/lec10.htm
https://www.bis.org/publ/bppdf/bispap67s.pdf
https://www.officialgazette.gov.ph/1948/06/15/republic-act-no-265/#:~:text=%
E2%80%94The%20powers%20and%20functions%20of,meeting's%20of%20th
e%20Monetary%20Board

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