The UN Development Programme recently proposed reducing the debt of 52 low and middle-income countries, as G20 finance ministers prepare to meet in India.
The countries which are either in debt distress or high risk of debt distress, account for more than 40 percent of the world’s poorest people and have trouble maintaining essential services in the face of debt servicing costs.
“The countries most burdened by debt and lack of access to financing are also being battered by multiple other crisis – they are among the most affected by the economic impact of COVID-19, poverty, and the accelerating climate emergency,” UNDP Administrator Achim Steiner said.
“The time has come to address the deepening chasm between rich and poor countries, to change the multilateral landscape, and to create a debt architecture that is fit for purpose in our complex, interconnected, and post-COVID world,” he added.
The UNDP called for a 30 percent reduction on the value of the public external debt stock of these nations in 2021, which said could help save up to $148 billion in debt service payments over eight years. An additional $120 billion in savings could be generated by refinancing middle-income countries’ bond debt to official creditor rates.
The call follows a plan unveiled by UN Secretary General Antonio Guterres to boost spending by nations on sustainable development goals, with dealing with debt one of the issues identified, aside from eliminating poverty and hunger, access to clean water, and action to mitigate climate change.
If the UNDP proposal sees the light of day, it would be a great relief for cash strapped nations who often have no choice but to wallow deeper in debt as they deal with the different forms of crises, domestic and global, currently washing over the planet. Countries like the Philippines, which has been taking on worrisome levels of debt in recent years, will certainly appreciate any form of relief that will allow financial resources to be diverted to addressing the many urgent concerns and achieving sustainable development goals.*
