United Nations: Half of our world is sinking into a development disaster, fuelled by a crushing debt crisis, UN Secretary General Antonio Guterres told a press conference on the state of the world’s debt Wednesday.
Guterres said this while presenting the report, "A world of debt. A growing burden to global prosperity".
"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, issuing a grave warning as global public debt reached an all-time high of $92 trillion in 2022.
According to the report, an increasing number of countries find themselves trapped in a situation where both their development and their ability to manage debt is compromised.
Currently at least 19 developing countries are spending more on interest than on education and 45 are spending more on interest than on health. In total, 48 countries are home to 3.3 billion people, whose lives are directly affected by underinvestment in education or health due to large interest payment burdens, the report said.
"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", Guterres said.
In Africa, the amount spent on interest payments is higher than spending on either education or health. Developing countries in Asia and Oceania (excluding China) are allocating more funds to interest payments than to health, the UN report said.
Similarly, in Latin America and the Caribbean, developing countries are devoting more money to interest payments rather than to investment.
"Across the world, rising debt burdens are keeping countries from investing in sustainable development", Guterres said.
Highlighting the inequalities in the international financial architecture, the report said:
"The burden of debt on development is intensified by a system that constrains developing countries access to development finance and pushes them to borrow from more expensive sources, increasing their vulnerabilities and making it even harder to resolve debt crises."
Guterres said a growing share of debt is held by private creditors who charge sky-high interest rates to developing countries.
As an example, he cited African countries that on average pay four times more for borrowing than the United States and eight times more than the wealthiest European countries.
For all the latest News, Opinions and Views, download ummid.com App.
Select Language To Read in Urdu, Hindi, Marathi or Arabic.
