Talks with G20 on relief for borrowers are reportedly “not advancing at all”
FILE PHOTO: US Treasury Secretary Janet Yellen leaves after attending G-20’s third Finance Ministers and Central Bank Governors (FMCBGs) meeting in Gandhinagar, India, July 17, 2023 © AP / Ajit Solanki
With talks of G20 finance ministers in India stalling on the subject of debt relief, the UN Development Programme (UNDP) has raised the alarm about the plight of developing countries. This follows last week’s UN report about the catastrophic levels of public debt affecting almost half the globe.
G20 representatives met on Monday in Gandhinagar, Gujarat but made little to no progress in discussions about restructuring the debt held by developing nations, AP reported.
“I think the bottom line is, as of [July] 2023, the issue of debt restructuring is really not advancing at all on a scale that is called for and needed,” UNDP administrator Achim Steiner told Reuters, calling the situation a “grave concern.”
Last week, UN Secretary General Antonio Guterres warned that 52 countries had no way to reduce their debt burden and were approaching default. Promoting a UN Conference on Trade and Development (UNCTAD) report on the growing problem of debt, Guterres said that 3.3 billion people lived in countries that were spending more on interest payments than on health or education.
“This is more than a systemic risk – it’s a systemic failure,” Guterres said last Wednesday.
UNCTAD specified that at least 19 developing nations spent more on interest than on education, and in another 45 it amounted to more than spending on healthcare. According to the UN agency, almost 40% of the world is in serious debt trouble.
Particularly alarming was the “inherent inequality in the international financial system, burdening developing countries disproportionately,” UNCTAD said, noting that African countries were paying four times more in interest than the US, and eight times more than the richest nations of Europe. Restructuring this debt is proving difficult because 62% of it is now held by private creditors, up from 47% a decade ago.
Global public debt has reached the all-time-high of $92 trillion in 2022, Guterres warned last week, in a five-fold surge since 2000. The UNDP has attributed the increase to the Covid-19 pandemic and the surge in inflation and interest rates. The UN agency estimated that more than 20% of the world’s population – around 1.65 billion people – are now struggling to put food on the table and subsist on less than $3.65 a day.
The warnings by Guterres and UNDP went largely unnoticed due to the NATO summit in Lithuania, where the US-led military bloc pledged even more funding for the conflict in Ukraine.
