Baku, July 13, AZERTAC
Half of humanity lives in countries that are forced to spend more on servicing their debt than on health and education, which is nothing less than a development disaster, UN Secretary-General António Guterres said on Wednesday, according to official website of UN.
According to a new report by the UN Global Crisis Response Group, entitled A World of Debt, a total of 52 countries - almost 40 per cent of the developing world - are in “serious debt trouble”, Mr. Guterres said, backing calls for them to receive urgent fiscal relief.
Last year global public debt reached a record $92 trillion, of which developing countries shoulder 30 per cent - a “disproportionate amount”, the UN chief stressed.
He warned that 3.3 billion people suffer from their governments’ need to prioritize debt interest payments over “essential investments” in the Sustainable Development Goals or the energy transition.
“And yet, because these unsustainable debts are concentrated in poor countries, they are not judged to pose a systemic risk to the global financial system,” the UN Secretary-General added.
He insisted that the catastrophic levels of public debt in developing countries are a “systemic failure” that resulted from colonial-era inequality built into “our outdated financial system”.
“That system has not fulfilled its mandate as a safety net to help all countries manage today’s cascade of unforeseen shocks - the pandemic; the devastating impact of the climate crisis; and the Russian invasion of Ukraine”.
Indeed, the report points out that developing countries are highly exposed to external shocks precisely because they have to service debt repayments in foreign currencies.
The UN chief stressed that on average, borrowing costs are four times higher for African countries than for the United States and eight times higher than for the wealthiest European economies.
Poorer nations rely increasingly on private creditors who charge “sky-high” rates and find themselves forced to borrow more “for their economic survival”, he said.
From an important financial tool, debt has become “a trap that simply generates more debt”, Mr. Guterres deplored.
The new UN report proposes a number of urgent remedies, including an “effective debt workout mechanism” that supports payment suspensions, longer lending terms and lower rates, “including for vulnerable middle-income countries”, the UN chief said.