According to a new report equal UN Global Crisis Response TeamUnder the theme A World of Debt, a total of 52 countries – almost 40% of the developing world – are in “serious debt trouble”, said Mr. Guterres, supporting the call for countries This family received emergency financial relief.
Last year, global public debt reached a record $92 trillion, of which developing countries had to shoulder 30% – a “disproportionate amount”, the UN chief stressed.
He warned that 3.3 billion people affected by their government needing to prioritize debt payments over “essential investments” in the economy Sustainable development goals or energy conversion.
“However, because these unsustainable debts are concentrated in poor countries, they are not assessed as posing a systemic risk to the global financial system,” he added.
‘Outdated financial system’
He stressed that the dire public debt levels in the developing world were a “systemic failure” due to colonial inequality built into “our outdated financial system”.
“That system failed to fulfill its duty as a safety net to help all countries manage today’s string of unforeseen shocks – the pandemic; devastating impact of the climate crisis; and Russia’s invasion of Ukraine”.
Indeed, the report indicates that developing countries are vulnerable to external shocks precisely because they have to repay their debts in foreign currencies.
Africans pay four times more
The UN chief emphasized that on average, borrowing costs for African countries are four times higher than those of the United States and eight times higher than those of Europe’s wealthiest economies.
Poorer countries, he said, are increasingly dependent on private creditors, who charge “incredibly high” interest rates and are forced to borrow more “for their economic survival.”
Mr. Guterres from an important financial instrument, debt became “a trap that only spawns more debt”.
urgent reform
The new UN report proposes a number of urgent remedial measures, including an “effective debt settlement mechanism” that supports payment pauses, longer loan terms and lower interest rates. including for vulnerable middle-income countries,” the UN chief said.
The report also calls for a “massive” increase in sound long-term financing, by changing the way Multilateral Development Banks operate, redesigning them to support sustainable development and make use of private resources.
‘Hold on’
Mr. Guterres reiterated that the Bridgetown Agenda led by Prime Minister Mia Mottley of Barbados and the recent Summit for a New Global Financial Compact in Paris produced “other important proposals” regarding came to write off international debt and expressed hope that the upcoming G20 meeting in September will move some of these ideas forward.
Watch a series of videos from our colleagues at UN Geneva highlighting how different people around the world are dealing with the current cost of living crisis:
