Do it yourself

The International Monetary Fund (IMF) and the World Bank designed the Debt Sustainability Framework (DSF), to assess and manage the debt sustainability of low-income countries (LICs). DSF is a key tool in the overall global financial architecture. It analyzes a country's indebtedness and its vulnerability to shocks through regular analysis of a country's present and projected (over the next 10 years) debt burden. The analysis involves conventional solvency analysis (Debt to GDP, Debt to Export, Debt service ratio, fiscal balance, etc.) and stress testing for potential crisis situations. The idea is to detect potential debt crises early and implement appropriate preventive actions. DSF, inter alia, guides— (i)      borrowing decisions of LICs by assessing their financing needs and repaying abilities; (ii)     LICs how to maintain a balance between their development goals and financial stability; (iii)    the process of identifying countries un...

Continuing from my previous post ( View from the Mars ) “Make America Great Again” (MAGA), campaign of President Trump has been one of the most successful political campaigns of recent times. The campaign won Mr. Trump and his Republican Party (GoP), a clear control of the white house, the Senate and the Congress. From the campaign material available publicly, it is not clear what is the reference point for President Trump’s MAGA pledge. The campaign did not seem to have specified when did the greatness of the US begin to diminish and how much of the global stature, it supposedly enjoyed at some point in history, has been lost. For the lack of adequate information, it is safe to assume that the campaign of Mr. Trump, referred to the term of his predecessor, Joe Biden (2021-2025), as period of decline of America, and intends to revert to the status quo ante as on 19 th January 2021, when he vacated the White house after a four-year stay, and carry forward the unfinished agenda fro...

One small cap solar PV module manufacturer stock has yielded a return of 100x in less than two years, since its IPO listing in October 2022. There are many other “clean energy” stocks which have witnessed 5x to 20x rise in their stock prices. In most of these cases, the improvement in business and financial fundamentals of the concerned company is not commensurate with the rise in the stock price. Sustainability has emerged as one of the major investment themes in the post Covid-19 period. Businesses engaged in the activities related to renewable energy and electric mobility have received substantial massive investments and have seen massive rise in capacity building. Nonetheless, the astronomical rise in the stock prices of companies engaged in basic manufacturing like solar PV cells, EV battery modules, electric scooters, etc., may not be sustainable. This reminds me of my favorite instance from the Hindu mythology. I have narrated this instance many times before. Let me do it ag...

In the current week, the Delhi NCR region has recorded the highest-ever summer temperatures. The mercury kissed 50 Degrees Celsius. The residents are facing acute water and electricity shortages. The polling for the ongoing general elections in Delhi and Gurgaon was held on Saturday, the 25 th of May. Both cities recorded less than 60% polling. A lot of people cited scorching heat as the primary reason for not stepping out to vote. In that sense, extreme weather has now started to directly impact the health of our democracy. Surprisingly, the entire two-month-long election campaign; thousands of election speeches; 24X7 media debates; opinion pieces in newspapers; and zillions of social media posts and memes, appear to have mostly ignored this critical issue. Both national parties have incorporated their strategy to fight climate change and protect the environment in their respective manifesto. The Congress manifesto on environmental issues is much broader and seeks to deal with th...

  The latest festival season has started on a rather buoyant note, in Indian cities. As per initial reports luxury cars, smartphones, luxury watches, jewelry, home appliances, apparel, etc. are witnessing good consumer demand in most cities. Several high-end cars reportedly have a waiting period of one month to twelve months. Several stores have reported shortages of expensive smartphones and large-sized televisions. On the other side, rural markets are reporting a noticeable slowdown in demand. Most companies catering to the rural sector, like farm chemicals, farm equipment, consumer staples, building materials, etc., have commented in their presentations about the slower rural demand. The Reserve Bank of India, several commercial banks, and other lenders have highlighted rising stress in personal loans, credit card outstandings, and micro-lending. Two wheelers and entry-level cars are also not quite reporting encouraging numbers. There are reports about common households down...

Continuing from Friday (see Slipping back into deep abyss ) Two of the key questions that are begging answer from the central bankers infusing trillions of dollars in fresh liquidity in the global financial system and the governments borrowing incessantly to further their populist agenda, is what will be the impact of this debt burden on the potential economic growth? and How the perpetually slow growth will impact the demography, i.e., whether the world will follow the demographic trends of Japan and grow old? (see How will this tiger ride end? ) As per the World Bank report titled Global Waves of Debt - Causes and Consequences , "Amid record high global debt, low interest rates and subpar growth have led to an intense debate on whether the recent rapid increase in debt is reason for concern. Some argue that countries, especially those that issue reserve currencies, should take advantage of low interest rates to borrow more to finance priority expenditures. Oth...