Line chart of composite index of relative strength of a range of indicators, showing that the global economy remains in dire straits

Poor nations appeal for greater debt relief support

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Government ministers of poor and indebted nations will this week appeal to their creditors for a much more ambitious debt relief effort as they grapple with the healthcare and economic consequences of the coronavirus pandemic.

They will set out their case for greater support from foreign governments and multilateral lenders as delegates gather for the annual meetings of the IMF and World Bank.

Ken Ofori-Atta, Ghana’s finance minister, is calling for “a tectonic shift of the global financial architecture” to adjust an unsustainable risk premium on debt “not justified by Africa’s modest record of default”.

Writing in the Financial Times, he proposes an extended debt standstill of two years; $300bn in highly concessional new financing over three years to accelerate economic recovery; the structuring of a credit enhanced special liquidity and sustainability facility to make it cheaper and easier to access the capital markets; and a debt relief and cancellation programme for vulnerable countries.

The global economy has achieved only a fragile recovery from the depths of the coronavirus pandemic and many emerging economies are still suffering severe hardship, according to the latest Brookings-FT tracking index.

Growth in the world’s largest economies has been uneven, according to the index, which highlights the precarious outlook that will form the backdrop for this week’s IMF and World Bank meetings.

One additional form of modest support in emerging markets could come from impact investors. They can only ever hope to make a small dent but they have created debt vehicles to support small and midsize groups.


Column chart of S&P 500 earnings per share (year-on-year change %)  showing that US corporate earnings are forecast to have dropped in the third quarter

US stocks built on last week’s rally, with investors bracing themselves for the start of earnings season and weighing national election polls in which Joe Biden retains a strong lead. The Nasdaq Composite climbed 1.3 per cent at the opening bell, with tech heavyweights Twitter and Apple up 4 per cent and 2 per cent respectively.

Investors are counting on another surge in government spending, writes US investment editor Michael Mackenzie. If they come, fiscal stimulus measures are likely to reshape equity markets, with greater interest in sectors overshadowed by the tech sector juggernaut of recent years. There might well be more opportunities in smaller to medium-sized companies and in the materials, industrial and financial sectors.

Chart showing price of $3.5bn worth of obligation debt that matures in 2035 (cents on the dollar), indicating that Puerto Rico’s debt saga continues

Bondholders are preparing to go back into battle with Puerto Rico over a $35bn debt restructuring, gearing up for a fight even as the island’s economy remains under extreme stress from the fallout of the pandemic. Since a deal in February, the island’s finances have been further hit, exacerbating the economic strains left by Hurricane Maria in 2017. 


British Airways chief executive Alex Cruz has stepped down after four turbulent years in charge, as the airline and global aviation industry face their worst crisis in the wake of the pandemic. In an abrupt leadership change, Mr Cruz will be replaced by Aer Lingus chief Sean Doyle with immediate effect in a management shake-up by Luis Gallego, new boss of parent company IAG.

US companies are rewriting bonus plans, switching performance metrics and ignoring missed targets so that executives do not suffer a big drop in pay as a result of the Covid-19 crisis — changes that could become controversial with shareholders in the months ahead. Changes have included adding non-financial metrics to bonus qualifications and excluding months of poor profits during the worst of the pandemic.

The City of London’s top banks are clamping down on staff who have been waiting out the pandemic in their Mediterranean holiday villas or home countries, warning of hefty tax bills for those who stay away. Senior executives confirmed they were taking a tougher line on the hundreds of staff who began working thousands of miles away because of Covid-19.

Global economy

Bar chart of change in GDP (%) showing that tackling the pandemic's spread can help cushion the economy

Different approaches to the pandemic are now leading to sharp divergences in outcomes, with China, Taiwan and other Asia-Pacific economies on course to grow in 2020, even as countries where coronavirus has become endemic suffer severe contractions. They suppressed Covid-19 to lower levels and maintained tighter controls against a resurgence including keeping international travel on hold.

India has unveiled plans to inject at least $10bn into its economy, amid warnings from economists that New Delhi has done too little to revive growth after the shock of its coronavirus lockdown. Measures include giving central government employees advance wages ahead of the upcoming festival season. “It’s pretty underwhelming,” said Shilan Shah, India economist at Capital Economics, which expects the economy to contract 12 per cent this year.

The Trump administration has called on Congress to release about $135bn in unspent aid to small business after its latest offer for a $1.8tn economic stimulus package was rebuffed by many Democrats and Republicans. The appeal marks the White House’s latest shift in the talks, frequently wavering between openness to a big deal and far more limited solutions.

Get in touch

How is your workplace dealing with the pandemic? And what do you think business and markets — and our daily lives — will look like after lockdown? Please tell us by emailing [email protected] We may publish your contribution in an upcoming newsletter. Thanks

Reader DeadCat Flounce comments on Andrew Hill’s article How to put the human back in the collaboration machine, lamenting the suffocating number of different apps designed to aid remote working:

I used to have a telephone and email . . . Now I have two messaging systems, each with 20+ different “rooms”, along with my email and my phone. I’m constantly scanning them to see if I’ve missed someone who wants to speak to me. It’s crazy. Then, of course, there are the CRM systems that monitor my interactions with customers . . . the different meeting apps . . . and other communication systems. Apart from the productivity impact, there are security implications

The essentials

Lockdown has made companies rethink working patterns, but they are still trying to work out how to make the hybrid workforce model work. Top tips: send agendas in advance of meetings and invite written as well as spoken contributions; generate ideas remotely and share them anonymously; assess the impact on employee attitudes and performance; and explore hub-and-spoke models so workers can meet up closer to home.

Final thought

The future of strawberries may be upwards. Driscoll’s, a California-based berries distributor, is investing in vertical farming in response to climate change and deglobalisation without the need for genetic modification or the cultivation of new farmland. “Instead of worrying about moving an entire farm further up a mountain,” said Soren Bjorn, its Americas’ president, “we can move to vertical farms.”