According to a report from the United Nationsthe world public debt reached a record figure of 92 trillion dollars in 2022, due to the indebtedness of governments to face crises such as the coronavirus pandemic COVID-19and that it is the developing countries that are suffering the most from the burden.
Global domestic and foreign debt has more than fivefold in the past two decades, outpacing the rate of economic growth, as gross domestic product has only tripled since 2002, according to Wednesday’s report, released on the eve of the meeting of finance ministers and central bank governors of the G20, to be held from July 14 to 18.
Developing countries owe almost 30% of the world Public Debt, of which 70% corresponds to China, India and Brazil. Fifty-nine developing countries face a debt/GDP ratio above 60%, a threshold indicating high levels of indebtedness.
“Debt has been translating into a substantial burden for developing countries due to limited access to finance, rising borrowing costs, currency devaluations and sluggish growth,” the UN report added.
In addition, the international financial architecture makes access to financing inadequate and expensive for developing countries, according to the UN, which notes that net interest payments on debt exceed 10% of income in 50 emerging economies in the world. world.
“In Africa, the amount spent on interest payments is higher than spending on education or health,” according to the report, with 3.3 billion people living in countries that spend more on debt interest payments than on health or education.
“Countries face the impossible dilemma of paying their debt or serving their population”
Private creditors, such as bondholders and banks, account for 62% of the total external public debt of developing countries.
In Africa, this share of creditors grew from 30% in 2010 to 44% in 2021, while Latin America has the highest proportion of private creditors holding foreign public debt of all regions, at 74%.
The United Nations noted that the multilateral lenders should expand their financing, with measures such as the temporary suspension of the surcharges of the International Monetary Fund (IMF)) -commissions charged to borrowers who regularly use their lines of credit- and greater access to financing for countries with debt problems.
A debt workout mechanism is also needed “to cope with the slow pace of the G20 Common Framework,” the authors said, without elaborating on how such a mechanism should work.
The debt treatment framework was adopted by the Group of 20 largest economies and official creditors in October 2020, and aims to include non-member countries in debt relief.
Source: Ambito
