UNITED NATIONS: Nearly 3.3 billion individuals, constituting approximately half of the global population, currently reside in nations where debt interest payments surpass expenditures on education and healthcare, according to a fresh report released by the United Nations.
UN Secretary-General, Antonio Guterres, during a press conference Wednesday unveiled the report on the global debt landscape and conveyed his concerns over this escalating crisis that threatens to derail development efforts worldwide. “Half our world is sinking into a development disaster, fuelled by a crushing debt crisis,” he said.
“In 2022, global public debt reached a record $92 trillion and developing countries shoulder a disproportionate amount,” said the UN chief. Because such a “crushing debt crisis” is concentrated mostly in poor developing countries, it is “not judged to pose a systemic risk to the global financial system”, Guterres said. “This is a mirage,” he said.
Guterres emphasized that global public debt reached an unprecedented high of $92 trillion in 2022, with developing countries shouldering an unfair burden. Although this debt crisis primarily affects impoverished nations, Guterres was quick to point out that it is not currently deemed a systemic risk to the global financial system. However, he cautioned against complacency, asserting that this belief is nothing but a mirage.
While financial markets may not yet show signs of distress, the harsh reality remains that billions of individuals are feeling the repercussions, and public debt levels are skyrocketing at an alarming rate. The report disclosed a sharp increase in the number of countries grappling with elevated debt levels, rising from 22 nations in 2011 to 59 in 2022. Guterres emphasized, a staggering 52 countries, accounting for nearly 40% of the developing world, find themselves in dire straits concerning their debt obligations.
The report’s findings shed light on the precarious situation faced by several countries. In Africa, for instance, the funds allocated towards interest payments surpass those directed towards education and healthcare. Similarly, developing countries in Asia and Oceania, excluding China, prioritize debt interest over investments in health. Latin America and the Caribbean face a similar predicament, with developing nations allocating more financial resources towards interest payments instead of critical developmental endeavours. It is clear that mounting debt burdens impede countries worldwide from investing in sustainable development, obstructing progress on various fronts.
Guterres further highlighted the fact that a substantial portion of this burgeoning debt is held by private creditors who charge exorbitant interest rates to developing nations. Drawing attention to Africa, he revealed that the average borrowing costs for these countries are four times higher than those faced by the United States and a staggering eight times higher than the wealthiest European nations.
The alarming statistics underscore the urgent need for collective action to address the growing debt crisis. UN Secretary-General Guterres called for global solidarity and proactive measures to alleviate the burden on developing countries. Swift intervention is crucial to ensure that these nations can channel their resources towards essential sectors such as education, healthcare, and sustainable investments, propelling them towards a brighter future.
3.3 billion people live in countries that spend more on debt interest payments than on education or health.
This is more than a systemic risk – it’s a systemic failure.
Action will not be easy. But it is essential, and urgent.
— António Guterres (@antonioguterres) July 12, 2023
