A “systemic failure” poses a risk to the world financial system, according to the organization’s Secretary-General Antonio Guterres
Women prepare and sell food at a street in Nairobi, Kenya, March 2023. © Gerald Anderson/Anadolu Agency via Getty Images
Global public debt reached an unprecedented level of $92 trillion last year, with developing countries shouldering a disproportionate amount, the United Nations highlighted on Wednesday.
According to a new report by the UN Global Crisis Response Group, since 2000 world public debt has jumped more than fivefold, outpacing global GDP, which tripled over the same period. Almost 30% of the total global debt is owed by developing countries, it shows.
“Half our world is sinking into a development disaster, fuelled by a crushing debt crisis,” UN Secretary-General Antonio Guterres said, commenting on the report.
According to the calculations presented in the document, some 3.3 billion people, or nearly half of the world’s population, live in countries that spend more on debt-interest payments than on education or health.
Such unsustainable levels of debt are a result of the “inequality built into our outdated global financial system,” the UN chief explained. On average, borrowing costs are four times higher for African countries than for the US, and eight times higher than for the wealthiest European economies, he added.
According to Guterres, the situation is “a systemic failure” that poses a risk to the global financial system.
A World of Debt proposes a number of measures to tackle the situation, including a debt workout mechanism that supports payment suspensions, longer lending terms, and lower rates.
The report was released ahead of a meeting of finance ministers and central bank governors of the G20 member nations in India from July 14 to 18. According to Reuters, among the issues on the agenda will be the treatment of countries under the so-called Common Framework, a G20 initiative launched in 2020 to help poor nations delay debt repayments.
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