Repay debts – Loro Dinapoli http://lorodinapoli.org/ Sat, 17 Jul 2021 06:57:37 +0000 en-US hourly 1 https://wordpress.org/?v=5.7.2 http://lorodinapoli.org/wp-content/uploads/2021/07/icon-2021-07-06T154208.998-150x150.png Repay debts – Loro Dinapoli http://lorodinapoli.org/ 32 32 OYO Raises $ 660 Million in Debt Financing from Institutional Investors to Jumpstart COVID Affected Businesses and Pay Off Debt http://lorodinapoli.org/oyo-raises-660-million-in-debt-financing-from-institutional-investors-to-jumpstart-covid-affected-businesses-and-pay-off-debt/ http://lorodinapoli.org/oyo-raises-660-million-in-debt-financing-from-institutional-investors-to-jumpstart-covid-affected-businesses-and-pay-off-debt/#respond Sat, 17 Jul 2021 06:57:37 +0000 http://lorodinapoli.org/oyo-raises-660-million-in-debt-financing-from-institutional-investors-to-jumpstart-covid-affected-businesses-and-pay-off-debt/

OYO Raises $ 660 Million In Term Loans To Pay Off Past Debt

Oyo is one of the first Indian startups to raise capital through term loans

Hotel company Oyo Hotels and Homes has raised $ 660 million in debt financing from global institutional investors via term loan financing (TLB), according to a statement released by the company. The Gurugram-based unicorn will use the funds to pay off past debts, strengthen its balance sheet and for other business purposes, including investing in product technology, with the aim of reviving its COVID business.

The term loan financing channel refers to a tranche of a senior secured syndicated credit facility from global institutional investors. With the current funding cycle, Oyo is one of the first Indian startups to raise capital through the term loan financing route.

The proposed offer or issue was 1.7 times oversubscribed and the company received pledges of nearly $ 1 billion from the world’s leading institutional investors. Oyo said in his statement that the deal was broadened and increased by 10% to $ 660 million thanks to strong interest from well-known investors.

“… We are delighted with the response to OYO’s first TLB capital increase which was oversubscribed by major global institutional investors. We are grateful for the confidence they have placed in OYO’s mission to create value for hotel and home owners and operators around the world, ” said Abhishek Gupta, Group Chief Financial Officer. , OYO.

“… Our two largest markets have demonstrated their profitability at the slightest sign of an industry recovery after the COVID-19 pandemic,” he added.

“As a member of the OYO Board of Directors, it is encouraging for me to see the strong interest of the investment community in the company, which has enabled OYO to become the first Indian startup to be rated at independently by the world’s major credit rating agencies – Moody’s and Fitch, ”said Dr. W. Steve Albrecht, OYO Board Member and Chairman of the Audit Committee.

Founded in 2013 by Ritesh Agarwal, Oyo is today a leading multinational chain of hotels, guest houses and leased and franchised living spaces. Initially, Oyo consisted of budget hotels only, but gradually the startup expanded globally with vacation homes, hotels and rooms in various countries.


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How COVID has affected UK businesses – and what happens after July 19 http://lorodinapoli.org/how-covid-has-affected-uk-businesses-and-what-happens-after-july-19/ http://lorodinapoli.org/how-covid-has-affected-uk-businesses-and-what-happens-after-july-19/#respond Thu, 15 Jul 2021 14:40:14 +0000 http://lorodinapoli.org/how-covid-has-affected-uk-businesses-and-what-happens-after-july-19/ Britain will finally be freed from most of the restrictions placed on it during the pandemic from July 19 (and Northern Ireland from July 26). Knowing that the majority of the adult population has been doubly vaccinated, authorities are removing almost all legal restrictions on social contact. What does this mean for businesses? Is the […]]]>

Britain will finally be freed from most of the restrictions placed on it during the pandemic from July 19 (and Northern Ireland from July 26). Knowing that the majority of the adult population has been doubly vaccinated, authorities are removing almost all legal restrictions on social contact.

What does this mean for businesses? Is the worst over now? Can anyone get back to running the successful businesses he ran before the pandemic, generating tax revenue for the hard-pressed Treasury to repay the £ 372 billion he spent to support the country through COVID- 19?

At the start of the pandemic, trade watchers, myself included, were calling out sectors that we thought would do well – or badly – as restrictions were imposed. Some areas did not need a crystal ball to make an accurate prediction.

All restaurants, pubs and clubs were closed in 2020, and every music festival and physical conference was canceled. With restrictions continuing well into the second half of 2021, it is therefore not surprising that the sectors with the highest leave rates, as of May 31, are accommodation and food services, at 34% (133,000). of eligible workers put on leave, and also arts, entertainment and recreation, with 29% (41,700) on leave.

When the beer wasn’t flowing in 2020.
Iain Masterton / Alamy

Cash flow, where it could be found, supported some of these businesses through tough times. To give just one example, the Soho House Members Club (full disclosure: I am a member) asked members to continue paying their subscriptions monthly during the two periods it had to close, but credited the sum to their accounts to spend. when it reopened.

This ensured that 92% of members remained enrolled in 2020. With more than 59,000 applicants for membership as of May 30, 2021, Soho House – the holding company now renamed Membership Collective Group – has emerged from the pandemic in enough in good shape to be launching its IPO in the US this week, valuing the company at US $ 2.8 billion (£ 2 billion).

Retail and travel issues

While the food retail business has exploded – and is on the decline now that we all go out to eat again – other retail businesses, especially those anchored on Main Street, have had a long history of closings. Arcadia, Victoria’s Secret, TM Lewin, Jaeger, Harveys Furniture, Bonmarché and many more found themselves under administration despite 100% trade tariff relief and many other government initiatives to help them.

Empty shelves in a supermarket
Some retailers fared better than others.
Milton Cogheil / Alamy

Department stores and malls were already struggling, especially with online competition, and a pandemic was the last thing they needed. In 2020, total retail sales volume declined 1.9% from 2019, the largest annual decline on record.

International travel remains a very depressed industry and the July 19 freedoms will not help much, with the United States and many other parts of the world remaining closed to British nationals. Many flight crews remain on leave and British Airways, already one of the biggest recipients of leave money, began putting staff back on leave in June as the horizon for resumption of travel stretched further.

My local airport, Edinburgh, recorded its lowest passenger count since 1995 in the past 12 months, and the outlook remains bleak. The airport handled just under 3.5 million passengers in 2020, a 76% reduction from the previous year. It is estimated that this has cost the Scottish economy around £ 1 billion and over 21,000 jobs. Flights to, from and throughout the UK, which in 2019 were between 5,000 and 6,500 per day, are currently only 1,000.

The winners

There have been predictable successes, of course. Amazon, Royal Mail, Hermes, DPD – anyone who delivers to your door – have all done well. If you make cardboard in the UK, it’s been 12 to 18 months, a record.

But there were also areas where things went much better than expected. Debt collection companies, for example, had anticipated the problems of so many people who could lose their jobs, but instead saw much better collection rates because those who couldn’t get out and spend paid off their debts instead. . Arrow Global, the debt and alternative asset recovery firm that is being engulfed in private equity, said that in the first quarter of 2021 it raised more than 6% more than expected.

People stuck at home with more disposable income than usual weren’t just paying off their debts – they also noticed their home needed fixing, which prompted companies like Howden Joinery to announce a profit warning – on the rise. The company forecasts pre-tax profit of £ 300million for 2021, up 62% from £ 185million in 2020.

Meanwhile, business start-ups did not suffer in 2020 – 772,002 new businesses were started in the UK, up 13% from 2019. Many were in industries that benefited from the pandemic , such as manufacturers of personal protective equipment (PPE) or disinfectants, camp food sites for all restaurateurs, and take-out businesses.

A pink notice board with a Don't Panic message, as well as a face mask
Business training focused on winning sectors.
Tonik / Unplash, CC BY-SA

The leave scheme also kept unemployment at bay, contrary to expectations. In April 2020, the worst month for economic activity in the entire pandemic period, the government’s Office for Budget Responsibility (OBR) released a baseline scenario where unemployment would peak at 10% in the second quarter of 2020, falling at 8.5% and 7.0% in quarters 3 and 4. In fact, the highest unemployment rate in 2020 was 5.1% in quarter 4.

And now?

So what will happen when the restrictions are lifted on Monday? Can we look at summer 2020 as an indicator of the changes that will take place?

In 2020, after restrictions were eased in June, overall retail sales quickly returned to pre-pandemic levels, while hospitality and entertainment saw a much slower or no recovery – despite the government Eat Out to Help Out program. In January and February 2021, when non-essential retail outlets closed again, sales were again affected, but the drop was much smaller than in early 2020, suggesting that retailers and consumers alike were falling. were adapted to the restrictions.

So I’m not predicting that July 19 will make a big difference to general retail. However, if you are in a business of live events – music festivals, theater, conferences and of course the great UK wedding industry – then July 19th is the date when you can finally start over.

Expect an increase in demand, as unlike last year, the limits for gatherings are now going. Combined with the forced savings many have made over the past 18 months, this could see the average marriage surpass the £ 31,000 it would have cost in 2019.

I could be wrong, of course. In March 2020, commentators in the investment banking industry predicted a fee drop of up to 50% in the first six months of the year and believed that hundreds of investment bankers would lose their jobs.

What really happened was that global investment banking fees in 2020 reached US $ 127.5 billion, an increase of 18% from 2019, and the strongest annual period since the record began in 2000. In the UK, investment banks grossed a total of £ 4.9 billion in 2020, marking a 3% increase from 2019. This was helped by a increased activity in capital markets in the second quarter as companies rushed to refinance and consolidate liquidity, generating high fees for bankers.

Globally, lenders earned $ 42.9 billion in underwriting debt in 2020, up 25% from the previous record a year earlier. Things continued in this vein until 2021. During the first quarter, when IPOs and private equity offerings for public companies hit record highs, investment banking fees hit. $ 39.4 billion, the highest overall quarter on record.

Maybe the predictions aren’t that easy after all.


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Do you want to skip college? Not if you want to earn more money | Business http://lorodinapoli.org/do-you-want-to-skip-college-not-if-you-want-to-earn-more-money-business/ http://lorodinapoli.org/do-you-want-to-skip-college-not-if-you-want-to-earn-more-money-business/#respond Wed, 14 Jul 2021 12:22:06 +0000 http://lorodinapoli.org/do-you-want-to-skip-college-not-if-you-want-to-earn-more-money-business/ Are you skeptical about a four-year college degree? Still, it is better to earn money. Opposition to college as a general step on the path to adulthood has increased over the past decade. Critics say a four-year bachelor’s degree program puts most students in five-figure debt with no clear path from class to career. Almost […]]]>

Are you skeptical about a four-year college degree? Still, it is better to earn money.

Opposition to college as a general step on the path to adulthood has increased over the past decade. Critics say a four-year bachelor’s degree program puts most students in five-figure debt with no clear path from class to career.

Almost half (46%) of all families surveyed by Gallup for the Carnegie Foundation in New York City in November and December 2020 are alternatives to four-year-olds for children, even without financial barriers. He said he wanted to participate.

However, when comparing the value of a four-year degree with other qualifications (high school diploma, certificate program, associate degree), workers still have an advantage in the labor market and increase on average their income for life. ..

A bachelor’s degree is generally a good investment

According to the Federal Reserve Bank of New York, if a college degree is an investment, that’s a good thing. The typical annual rate of return for a four-year bachelor’s degree is around 14%, well above the threshold for a “good” rate of return for stocks (around 7%) and fixed income (3%). ).

According to 2019 data from the Federal Reserve Bank of New York, bachelor’s graduates receive about $ 45,000 per year for high school diplomas, compared to about $ 78,000 per year on average in dollars. Earn dollars.

However, “on average” does not mean that education rewards or college income bonuses are always profitable. Where do you go to school, how much you borrow, what you study and where you live after school all help you decide when to go home. Many of these factors are influenced by race, ethnicity and gender.

Your ability to repay your debts affects the value of your degree

Student loan debt is hard to avoid and even harder to pay off. According to federal data, college costs increased 117% between 1985-1986 and 2018-19. Meanwhile, according to the Federal Reserve in St. Louis, wages have not kept pace, increasing only 19% over the same period.

However, loans remain the primary means for low-income families to obtain a college degree. For your degree to be worthy of it, you must earn enough income to justify it. That means you have debt that won’t let you fall underwater – manageable student loan payments are about 10% of your after-tax discretionary income.

Obtaining a diploma is very important to get the best returns and to be able to pay off your debt. Many defaulting borrowers are in debt but do not have a degree.

“This is the worst case scenario. Some of these costs are incurred, but with little benefit, ”said Jonathan Rothwell, senior economist at Gallup.

The demand for your major problem

What you study in school affects the types of jobs you can get, your income, and your ability to pay off debt.

According to the 2015 Georgetown data report, average mid-career hires earn a bachelor’s degree in science, technology, engineering, math or STEM ($ 76,000), business ($ 67,000), health ($ 65,000) , and more. It is the highest among those who have acquired. University education center and workforce.

In the same report, the median income of mid-career hires among those whose bachelor’s degree was in fields such as the arts, humanities, liberal arts ($ 51,000), and educational and service roles such as the social work ($ 46,000). It turns out that the value is the lowest.

Use the Department of Education’s College Scorecard tool to estimate each school’s income, graduation rates, typical student debt burden, and other factors. You can search and compare income and liabilities by research area.

The place to live after graduation is also important

Thomas B, a nonprofit conservative think tank. According to the Fordham Institute’s May 2020 survey, where you live after you graduate also affects its value.

“In general, a college degree is a good investment, but the rewards from an international regional perspective are staggering,” said John Winters, associate professor at Iowa State University who conducted the study.

In cities, high school graduates bring in an average of $ 95,229. This is a premium of 86.2% over workers with a high school diploma and 55.7% over those with an associate’s degree.

According to Winters, this is mainly due to the concentration of work in cities, like tech, finance, and marketing, where workers often require a four-year bachelor’s degree. Workers in these fields earn higher wages, resulting in a higher return on investment for their degree.

However, Winters’ results also mean that a four-year degree is less important if you want to live in a smaller region or metropolitan area. The average income for a non-urban bachelor is $ 67,893, with a 46.4% premium over a high school graduate and a 29.6% premium over a high school graduate. ‘an associate’s degree.

The baccalaureate does not guarantee fairness

In a sense, college degrees can exacerbate income and racial inequalities, like student debt and the ability to repay it, said the Center for American Progress, a public policy research organization and senior policy analyst. List, said Marshall Anthony Jr.

“College degrees don’t usually work the same for everyone,” says Anthony.

Black borrowers are more likely to take on more debt than white borrowers, on average about $ 25,000 more, according to federal data.

In 2016, among those with a bachelor’s degree or above, full-time Asian workers aged 25 to 34 had a higher median annual salary ($ 69,100) than their white peers ($ 54,700). Increasingly higher median income for both racial / ethnic groups According to the latest data obtained by the National Center for Education Statistics, it was higher than its peers among blacks ($ 49,400) and Hispanics ($ 49,300) .

According to a 2016 Brookings Institution survey, black borrowers earn more interest over time. Four years after graduating from college, black graduates are $ 28,006 for white graduates, while student debt is $ 52,726.

Source link Do you want to skip college? Not if you want to earn more money | Business


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Chinese developer Languang Development slips on bond default http://lorodinapoli.org/chinese-developer-languang-development-slips-on-bond-default/ http://lorodinapoli.org/chinese-developer-languang-development-slips-on-bond-default/#respond Tue, 13 Jul 2021 05:35:00 +0000 http://lorodinapoli.org/chinese-developer-languang-development-slips-on-bond-default/ By Clarence Leong Shares of Sichuan Languang Development Co. are at their lowest for nearly a decade after the company defaulted on a bond and announced overdue debt of more than $ 700 million, the latest sign of unrest in the market. highly indebted real estate development sector in China. The Sichuan-based company has not […]]]>
By Clarence Leong

Shares of Sichuan Languang Development Co. are at their lowest for nearly a decade after the company defaulted on a bond and announced overdue debt of more than $ 700 million, the latest sign of unrest in the market. highly indebted real estate development sector in China.

The Sichuan-based company has not repaid 967.5 million yuan ($ 149.4 million) in principal and interest owed on a 2019 medium-term bond that matured over the weekend, he said. -said Tuesday in a document filed on the Shanghai Stock Exchange. Including bank and trust loans, the company has outstanding debt of CNY 4.54 billion, he said.

Languang Development said it has faced refinancing difficulties in the public market since the end of 2020, as the recovery in operating cash flow has slowed and some financial institutions have advanced due dates of the debt.

On Tuesday, S&P Global Ratings downgraded the issuer’s long-term credit rating, saying it expects non-payment of the bonds to lead to a general default, as it triggers cross defaults and demands. accelerated repayment on other debts.

Languang Development’s Shanghai-listed stocks briefly dipped in morning trading to CNY 2.70. Stocks closed below that level in 2010. Stock was recently down 0.4% to CNY 2.74, losing 41% so far this year.

A tight credit environment and slower sales growth weighed on the real estate sector in China. Developers such as Sunshine 100 China Holdings Ltd., Oceanwide Holdings Co. and China Fortune Land Development Co. have defaulted on their debts this year.

Languang Development said it is discussing solutions and looking to raise funds, adding that it has substantial support from the local government to design medium and long-term plans.

Write to Clarence Leong at clarence.leong@wsj.com


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Punjab Mandi board in dire straits as RDF has yet to be released by the Center http://lorodinapoli.org/punjab-mandi-board-in-dire-straits-as-rdf-has-yet-to-be-released-by-the-center/ http://lorodinapoli.org/punjab-mandi-board-in-dire-straits-as-rdf-has-yet-to-be-released-by-the-center/#respond Sun, 11 Jul 2021 19:48:41 +0000 http://lorodinapoli.org/punjab-mandi-board-in-dire-straits-as-rdf-has-yet-to-be-released-by-the-center/ The Punjab State Agricultural Marketing Board, also known as the Mandi Board, is facing a severe financial crisis as the Rural Development Fund (RDF) tasked by the state government to purchase grain has not been released by the Center for the rabi season) again. Also, the amount of the fund for last year’s kharif season […]]]>

The Punjab State Agricultural Marketing Board, also known as the Mandi Board, is facing a severe financial crisis as the Rural Development Fund (RDF) tasked by the state government to purchase grain has not been released by the Center for the rabi season) again.

Also, the amount of the fund for last year’s kharif season 2020 has been reduced. The Center owes to Punjab 760 crore RDF for the rabi season and 500 crore for the 2020 kharif harvest when only 1% accumulation was allowed against 3% charged by the state government.

Due to lack of funds, the loans raised by the board of directors accumulate and the development works, in particular in the rural areas of the Punjab, are at a standstill.

Concerns about the once-cash-rich council, which funded various state government spending, intensify as the Union’s Food and Public Distribution Ministry is in no mood to unlock the funds. funds anytime soon. As a result, loans up to 3,000 crores, including 120 crore of interest, accumulated for the board of directors.

Loans are part of the 3,976 crore raised by the board of directors by pledging future accumulations of funds for the state government debt cancellation program launched in 2018.

“We don’t have the funds to repay the loans and start the development work,” said a board member.

The RDF is managed by the Rural Development Council, of which the Chief Minister, Captain Amarinder Singh, is ex officio chairman. The maintenance of nearly 66,000 kilometers of roads in the rural belt is ensured by the fund.

“Our coffers have dried up because we have no funds for future work and to pay off debts. We are supposed to pay semi-annual installments to pay off the debt. Our last installment of 325 crore was paid by the state finance department, ”said the head of the board.

The board of directors had made use of loans to renounce 4,600 crore in debt of 5.5 lakh farmers under the state government agricultural exemption program with 1800 crore still pending. Too, 520 crore must be paid to 2.85 lakh of landless workers.

To repay the loans raised by pledging RDF, 26 crore is given on a monthly basis and 625 crore every six months.


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Zimbabwe should refuse to repay colonial debt http://lorodinapoli.org/zimbabwe-should-refuse-to-repay-colonial-debt/ http://lorodinapoli.org/zimbabwe-should-refuse-to-repay-colonial-debt/#respond Sat, 10 Jul 2021 09:56:24 +0000 http://lorodinapoli.org/zimbabwe-should-refuse-to-repay-colonial-debt/ THE Zimbabwean government is currently engaging with its creditors to reduce the burden of its external debt. Economic observers argue that the country would be justified in repudiating the debt it inherited from the colonial era since there is no customary international law that requires Zimbabwe to take responsibility for the debt of the era. […]]]>

THE Zimbabwean government is currently engaging with its creditors to reduce the burden of its external debt.

Economic observers argue that the country would be justified in repudiating the debt it inherited from the colonial era since there is no customary international law that requires Zimbabwe to take responsibility for the debt of the era. colonial.

The first democratically elected government had good reason to invoke the odious debt doctrine which states that debt incurred by a despotic regime must not be honored by a successor constitutional government.

The current negotiations could therefore be an opportunity for Zimbabwe to remind the international community of its odious heritage as it seeks to reduce its current debt. It has been suggested that a large part of this debt merits non-payment because of its heinousness.

That is, the debt was contracted without the consent of the vast majority of Zimbabweans, it did not benefit them, and creditors were fully aware of these facts when the loans were made to the minority government led by Ian Smith in his later years.

Upon independence in 1980, Zimbabwe inherited a debt of US $ 700 million from the Rhodesian government; the result of United Nations sanctions that shattered loans to the white regime to buy weapons during the war, a war in which thousands of indigenous people perished to defend their birthright.

Then-new Prime Minister Robert Mugabe bowed to pressure from the international community to inherit debt in exchange for a Marshall Plan for Zimbabwe of more than $ 2 billion in reconstruction and development grants post-war.

This inherited and unjust debt was short term and at high interest; imposing a heavy repayment burden on taxpayers in the early 1980s, just as drought hit.

In the absence of large subsidies to deal with drought and finance post-civil war reconstruction, Zimbabwe relied on loans to purchase imports.

The country’s large debt burden was thus created and set in motion, creating a generational albatross.

Of the US $ 700 million inherited, nearly US $ 600 million was owed to private lenders, while US $ 100 million was owed to bilateral creditors and just over US $ 5 million to multilateral lenders. .

Much of this debt had been accumulated during the last years of the Rhodesian regime, after being ostracized by the international community and repeatedly denounced as “illegal” by the United Nations General Assembly and the Security Council.

Member states have repeatedly been ordered not to recognize the regime or to help its survival in any way. In fact, most of the pre-independence loans from private creditors were granted in violation of the sanctions imposed on Rhodesia by the United Nations Security Council, and therefore would have been in violation of international law.

In a resolution of May 1968, the Security Council, in addition to requiring UN members and their nationals to cease trading with Rhodesia, banned all financial transactions with the regime. Therefore, any creditor who loaned funds to the Smith government was acting illegally.

Similarly, debt incurred by Rhodesia prior to the unilateral declaration of independence from a World Bank project has been condemned as odious.

The World Bank made a number of substantial loans when the country became part of the Federation of Rhodesia and Nyasaland (comprising today’s Zimbabwe, Zambia and Malawi) in the early 1950s.

In total, the World Bank has loaned US $ 140 million for various projects, including the construction of the Kariba dam.

The repayment of this debt became so onerous that the Smith government fled to repay it, with the result that: “Kariba was not only the greatest internal dam of its time, but also the biggest default of a government on a World Bank project “.

Throughout the 1980s Zimbabwe borrowed from international lenders, supposedly to invest in productive activities. Many of these projects had questionable benefits, such as World Bank loans to plant trees in areas where local people already had enough wood for their energy needs.

During the 1980s, poverty declined. But by the end of the decade, debt repayments were equivalent to 25% of Zimbabwe’s exports and 25% of government revenue. Despite this, the World Bank ironically declared that Zimbabwe had avoided a “damaging build-up of external debt”.

In reality, the only way Zimbabwe could keep paying was to receive new loans to pay off the old ones, heralding the urgency of a debt trap. With private banks less willing to lend to the country, the indebted government was effectively bailed out with new loans from international institutions, especially the World Bank and the International Monetary Fund (IMF).

These structural adjustment loans were not intended to invest in a specific project, but were used to repay old and growing debt. Structural adjustment loans were linked to Zimbabwe’s adoption of policies such as cuts in public spending, trade liberalization, price deregulation, exchange rate devaluation and relaxation of labor laws. .

Such policies certainly had support within government and were presented as homegrown, but were in fact a requirement of lenders.

Zimbabwe’s debt is estimated to be US $ 750 million directly from structural adjustment loans from the World Bank and IMF.

Zimbabwe’s debts to international financial institutions amount to more than $ 8.1 billion.

Much of the debt, around US $ 5.9 billion, is made up of accumulated arrears, penalties, and late interest, which means the main debt itself is only 2.2. billion US dollars.

Since a significant portion of this debt is arguably odious, a debt audit is needed to initiate the cancellation of some of this burden on the country.


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Pros and Cons of Debt Management – Forbes Advisor http://lorodinapoli.org/pros-and-cons-of-debt-management-forbes-advisor/ http://lorodinapoli.org/pros-and-cons-of-debt-management-forbes-advisor/#respond Fri, 09 Jul 2021 12:10:17 +0000 http://lorodinapoli.org/pros-and-cons-of-debt-management-forbes-advisor/ Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but this does not affect the opinions or ratings of our editors. Find out if you qualify for debt relief Free estimate without obligation When paying off debt is a struggle, enrolling in a debt management program is […]]]>

Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but this does not affect the opinions or ratings of our editors.

Find out if you qualify for debt relief

Free estimate without obligation

When paying off debt is a struggle, enrolling in a debt management program is one possible solution.

Debt management plans, or DMPs, can combine multiple debt payments into one so that they are easier to repay. Other benefits may include interest rate reductions or fee waivers.

While debt management can help you get out of debt faster and with fewer headaches, it’s important to consider the pros and cons first.

What is debt management?

Simply put, debt management is a structured plan for paying off unsecured debt, such as credit cards.

A person who feels overwhelmed by their debts can turn to a debt management company or credit counseling agency for help paying off what they owe. The debt management company or credit counselor will review their financial situation and then work with the debtor and their creditors to create a debt management plan.

Debt management plans generally allow three to five years to pay off debts included in the plan. As part of the plan, creditors can agree to lower interest rates and reduce or waive certain fees.

After everyone involved has agreed to a DMP, the debtor makes a monthly payment to the debt management company or credit counselor. This payment is then distributed among the creditors included in the debt management plan.

Debt management can be an option if you have unsecured debt that you need help getting under control. The types of debt that you may be able to repay through a debt management program include:

  • Credit card
  • Medical bills
  • Personal loans or lines of credit

In return for helping you with your debt, the debt management company or credit counseling agency may charge a fee for their services. This may include an initial DMP setup or registration fee, as well as a monthly fee. Monthly fees can be included in the amount you pay monthly for your debt management plan. In certain cases of difficulty, these fees may be reduced or waived.

Benefits of Debt Management Plan

There are several advantages to using debt management to pay off unsecured debt. Some of the benefits include:

  • Simplified payments. Debt management plans can simplify payments, since you will only have one payment to make each month instead of paying multiple creditors.
  • To save money. If your debt management plan includes interest rate cuts and fee waivers, it could help save you a decent amount of money.
  • Win time. Enrolling in a debt management program can also save you time if you are able to pay off your debt faster. And you have the predictability of when your debt will be paid off.

Debt management can also help you avoid potentially negative consequences if you risk falling behind on your payments. Missed or late debt payments can result in late fees, which are on top of what you owe. They can also damage your credit rating, making it more difficult to approve new loans or lines of credit.

Enrolling in a debt management program can also help you avoid collection actions. In the worst case scenario, you could be sued for unpaid debts. But debt management can make it easier to keep your accounts up to date.

Disadvantages of Debt Management Plan

While there are some advantages to debt management, it is not necessarily a perfect solution to paying off debt. Here are some of the biggest pitfalls to know:

  • Limited to certain types of debt. A debt management plan is generally intended to be used for unsecured debt like credit cards or personal loans. You generally cannot use debt management for auto loans or other secured debts.
  • Creditors may not agree. A key part of your debt management success relies on the agreement of your creditors. If some of your creditors agree but others don’t, it could make it harder to pay off what you owe.
  • Closure of credit accounts. In most cases, you may need to close one or more credit accounts to enroll in DMP. This means that you will not be able to use these cards and you may be prohibited from applying for new credit.

A side effect of closing credit accounts while enrolling in a debt management plan is the potential impact on credit score. Much of your FICO credit score is based on your credit usage, which is the percentage of your available credit that you are using. The lower this number, the better.

When you close accounts included in a DMP while a balance is still owed, it may reduce your credit limit. As a result, your credit utilization rate could increase, which could adversely affect your credit score.

It is also important to consider the commitment involved. Debt management plans only work when debtors commit to carrying them out. But if they don’t address the underlying issues of overspending or take the plan seriously, it could end up being a failure.

Debt Management vs Debt Consolidation vs Debt Settlement

Debt management and debt consolidation are sometimes used interchangeably, but they are not the same thing. With debt management, you create a plan to follow in paying off debt. Debt consolidation, on the other hand, involves combining several debts into one.

For example, you could take out a debt consolidation loan and use the proceeds to pay off all of your credit cards. You would then make a payment for the debt consolidation loan in the future. Another credit card debt consolidation option is a 0% APR balance transfer offer.

Debt consolidation may or may not save you money on interest and fees. A lot of it depends on the terms of the debt consolidation or balance transfer loan offer you get. The repayment time for consolidated debt may vary depending on the length of the loan or the length of a 0% APR balance transfer offer.

In between, debt consolidation can offer more flexibility than a debt management plan. If you’re not necessarily struggling with debt, you may want to consider consolidation options first before exploring a DMP.

Debt settlement allows you to settle debts for less than what is owed. For example, if you owe a credit card $ 5,000, your credit card issuer might agree to let you pay $ 3,500 and forgive the rest. This strategy assumes that you have cash on hand to pay the agreed amount. It also assumes that you are behind on your bills and that your credit score has suffered.

Debt settlement can be an option if you are behind on your debt payments and want to avoid filing for bankruptcy, although some experts recommend bankruptcy over debt settlement. It is possible to negotiate a debt settlement with creditors directly or through a debt settlement company. Keep in mind that debt relief companies charge a fee, usually a percentage of the debt amount, for these services and it may take time to see results which can lead to further damage. to the credit score.

If you think debt settlement is your only option and you need help with the process, choose a reputable debt settlement company.

Who is a debt management program for?

Overall, a debt management plan might be right for someone who:

  • Struggling to keep up with debt payments
  • Wants to streamline monthly payments
  • Would like to save on interest and fees
  • Can afford the monthly payments required by a DMP

If you’re not sure whether a debt management program is the best option, talking to a certified credit counselor can help. Credit counselors can look at your income, budget, expenses, and debt to assess whether a DMP is right for you. And, if not, they can also help you decide whether you should consider another option, like debt consolidation or even bankruptcy.

You may not need any of these options. Instead, you might just need someone to help you tighten your budget so that you can find the extra money to reduce your debt. Again, this is something that a credit counselor can help you with.

How to Choose a Debt Management Program

If you think debt management is the best way to deal with your financial situation, it’s important to compare companies carefully. While many legitimate companies offer debt management services, the industry also has its fair share of scammers.

When looking for debt management companies, check their credentials first. Look for a credit counselor certified by the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).

Then ask them for details about the services they provide and the fees they charge. More specifically, find out about:

  • What types of debt you can register in a DMP
  • How long do the plans last
  • Interest rate reductions and fee waivers
  • Estimated monthly payments
  • Initial and monthly fees

Also, make sure you understand what your responsibilities are once you enroll in the plan. For example, it’s important to know when your payments are due and what can happen if you miss a payment or pay late. The more questions you ask up front, the fewer surprises there will be once you are officially enrolled in a debt management program.

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Americans Rank Debt Repayment As Highest Financial Priority, Study Finds – How To Get It Right http://lorodinapoli.org/americans-rank-debt-repayment-as-highest-financial-priority-study-finds-how-to-get-it-right/ http://lorodinapoli.org/americans-rank-debt-repayment-as-highest-financial-priority-study-finds-how-to-get-it-right/#respond Wed, 07 Jul 2021 20:31:06 +0000 http://lorodinapoli.org/americans-rank-debt-repayment-as-highest-financial-priority-study-finds-how-to-get-it-right/ item The # 1 goal of Americans’ personal finances is paying down debt, according to a recent study. Consider paying off your debt with one of these debt management strategies. (iStock) Debt can drain your budget and drain your income, especially if you’re struggling to pay off high interest revolving credit card debt. It may […]]]>

The # 1 goal of Americans’ personal finances is paying down debt, according to a recent study. Consider paying off your debt with one of these debt management strategies. (iStock)

Debt can drain your budget and drain your income, especially if you’re struggling to pay off high interest revolving credit card debt. It may seem like no matter how much money you spend on debt repayment, it just keeps snowballing.

It’s no wonder that paying down debt is Americans’ top financial priority, says one recent Marcus study by Goldman Sachs. Paying off debt can seem like a daunting goal, but it can be done quickly and painlessly if you make it a priority. Here are some ways to get out of debt quickly:

  1. Consolidate your debts with a low-rate personal loan
  2. Open a credit card with balance transfer with an APR period of 0%
  3. Use a debt repayment or budgeting method

If you are ready to get out of debt, you can compare financial products like debt consolidation loans and credit cards with balance transfer in Credible’s online marketplace.

ADVANTAGES AND DISADVANTAGES OF A LONG-TERM PERSONAL LOAN

1. Consolidate your debts with a low-rate personal loan

Personal loans are lump sum installment loans issued directly to your bank account and they are repaid in fixed monthly installments over a set period of months or years. Like credit cards, personal loans are generally unsecured, which means they don’t require collateral. But unlike credit cards, personal loans can come with lower fixed interest rates.

The average interest rate for a personal loan was 9.46% in the first quarter of 2021, according to the Federal Reserve. In contrast, the average interest rate paid by consumers on credit card debt was 15.91%.

Since these loans have lower interest rates and a more predictable repayment schedule, they are commonly used for debt consolidation. Using a personal loan to pay off debt can help you:

  • Save money on interest
  • Pay off debt faster
  • Reduce your monthly payments

It’s important to look for the lowest possible interest rate on a debt consolidation loan to make sure you’re saving as much money as possible. You can do this with prequalification, which allows you to check potential interest rates suitable for your needs without hurting your credit score.

The table below shows the estimated interest rate ranges offered by genuine personal lenders. You can apply for a personal loan prequalification via multiple lenders at once using Credible’s online loan marketplace.

HOW TO GET A DEBT CONSOLIDATION LOAN WITH BAD CREDIT

Since debt consolidation loans are generally unsecured, lenders determine eligibility and set interest rates based on your credit score and debt to income ratio. To get the best possible interest rate on a personal loan, you will need a good or better credit score, which is 670 or better, depending on the FICO scoring model.

You can monitor your credit score for free via Credible.

HERE’S HOW CREDIT MONITORING CAN HELP YOU IMPROVE YOUR CREDIT RATING

2. Open a credit card with balance transfer with an APR period of 0%

If you cannot cope with a growing credit card balance but you still have a good credit rating, you could potentially open a balance transfer credit card to pay off your debt on better terms. Many credit card issuers offer an interest-free introductory period of up to 21 months to attract new customers.

The biggest advantage of pay off credit card debt with a balance transfer credit card is the potential for savings. You can avoid paying interest if you can pay off the balance before the 0% annual interest rate period expires. This is an important advantage, although this debt repayment strategy has some drawbacks:

  • You will need a good or better credit score to qualify for a balance transfer card with an interest-free period
  • You can only use this debt consolidation method on credit card debt
  • You may need to pay a balance transfer fee, usually 3-5% of the total amount

You can shop for balance transfer cards and interest-free cards in the Credible Marketplace.

3. Use a method of debt repayment or budgeting

If you don’t want to take on more debt to pay off your existing debt, you can try one of these strategies instead:

  • Debt Avalanche Method: Prioritize paying off your highest interest rate debt to save money fast and have a big impact on debt repayment
  • Debt Snowball Method: Focus on repaying your smaller debts to gain momentum while getting out of debt
  • Budget 50/30/20: Allocate 50% of your income to necessary expenses, 30% to discretionary expenses and 20% to building up your savings and paying off your debts

DEBT SNOWBALL METHOD VS. DEBT AVALANCHE: WHAT’S THE DIFFERENCE?

Consider your financial situation before consolidating your debt

Using a balance transfer card may not be the best option for debtors with bad credit, just as using a personal loan for debt elimination may not be a good option. if you can’t get a good interest rate. It is important to consider your unique financial situation when choose a debt repayment method.

If you need help choosing a debt management product, get in touch with an experienced loan officer to Credible for more. You can also use the savings calculator below to see your potential savings on debt.

ARE YOU THINKING OF REFINANCING YOUR STUDENT LOANS? WHAT THERE IS TO KNOW

Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at moneyexpert@credible.com and your question could be answered by Credible in our Money Expert column.


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The history of Pakistan’s public debt http://lorodinapoli.org/the-history-of-pakistans-public-debt/ http://lorodinapoli.org/the-history-of-pakistans-public-debt/#respond Tue, 06 Jul 2021 06:42:46 +0000 http://lorodinapoli.org/the-history-of-pakistans-public-debt/ The PTI government claims to have paid off record debt. It’s correct. Over the past three years, external debt repayments have amounted to nearly 3.5 trillion rupees, more than ever before. PML-N says PTI has added a lot more to debt in three years than it has in five years. This is also correct. While […]]]>

The PTI government claims to have paid off record debt. It’s correct. Over the past three years, external debt repayments have amounted to nearly 3.5 trillion rupees, more than ever before.

PML-N says PTI has added a lot more to debt in three years than it has in five years. This is also correct. While the PML-N government has added Rs 10.6 trillion to the gross public debt from 2013 to 2018, the PTI government has added Rs 13 trillion so far (until March 2021). But it should also be mentioned that the PPP government only added 6.5 trillion rupees to the gross public debt from 2008 to 2013.

The point is, all parties choose numbers that suit their narrative, but the real story is somewhat different.

The face value of debt can be misleading. What really matters is gross public debt as a percentage of GDP.

The 2005 Fiscal Responsibility and Debt Limitation Act capped public debt, limiting it to 60% of GDP. However, in 2013, the PPP government exceeded the cap by adding 5 percentage points, bringing it to 63.8% of GDP. The PML-N government has added another 8.2 percentage points, while the PTI government has so far added 9.3%, bringing the gross public debt to 81.4% of GDP.

How is it that the PTI government has added so much debt in less than three years? The massive devaluation, which the government was forced to make in the wake of an artificially overvalued exchange rate, explains much of the debt build-up. Immediately after devaluation, the net increase in debt slowed down and gross government debt as a percentage of GDP began to decline.

From June 2018 to June 2019, the rupee devalued by 34%, from Rs 121 per US dollar to Rs 162, while the gross public debt increased by 19 percentage points, reaching 86% of GDP.

But since June 2019, our gross public debt has actually fallen by almost 5% of GDP. This is largely due to the fiscal discipline imposed by the government and the targeted reduction in the primary deficit. But the real test of the PTI government begins now, where it faces a difficult choice between expansionary fiscal policy fueling growth but with an increasing level of public debt versus fiscal discipline with continued debt reduction with modest growth. Achieving the ambitious goal set for RBF will also play a role.

The history of debt is not that hard to understand. Domestic debt is nothing more than the accumulation of the budget deficit over the years, while the external debt is the accumulation of the current account deficit. Interest payments further aggravate the outstanding debt, and as the government struggles to repay the principal, previous debts are rolled over.

No political government is limited to overspending (unless pushed by the IMF), because any tax cushion it creates would only benefit the next government. This twisted political economy creates perverse incentives for each government to play its part in perpetuating Pakistan’s debt crisis.

The country has now reached a stage where it must not only borrow to run the government, but also to service the previous debt. In 2020-2021, the federal government had net revenues of 3.7 trillion rupees, but paid 4.3 trillion rupees in the form of mark-ups and repayment of foreign loans. It is financially unsustainable but politically insoluble.

The only way to ease Pakistan’s debt burden is to widen the tax net and reduce circular debt, pension liabilities, losses of state-owned enterprises, and most importantly, unproductive civilian and military government spending. .

Posted in The Express Tribune, July 6e, 2021.

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