United Nations (EFE)
“Some 3,300 million people – almost half of humanity – live in countries that spend more on debt interest payments than on education or health,” denounced the UN Secretary General, António Guterres, when presenting a report titled “A world of debt”.
According to Guterres, half the world is sinking “into a development disaster”, with governments forced to choose “serving their debt or serving their people” and without fiscal space to invest in improvements for citizens.
“It is a systemic failure. It may appear that the markets are not suffering yet. But the people are suffering”, insisted the head of the United Nations, which in recent years has presented several proposals to reform the international financial architecture and alleviate the debt burden of countries with difficulties.
New debt record
According to UN data, by 2022 the world reached a record $92 trillion in public debt, of which developing countries account for a disproportionate share of the total and generally pay much higher interest rates, often at private creditors who charge them very high rates.
“On average, African countries pay four times more to borrow than the United States and eight times more than the richest European countries,” Guterres told a news conference.
A total of 52 countries, almost 40% of the developing world, face debt problems and 36 are over-indebted or at high risk, according to data from the International Monetary Fund (IMF).
According to Guterres, this is a “result of inequality built into our outdated global financial system, which reflects the colonial power dynamics of the time it was created.”
Although public debt has been increasing for decades, the pandemic and other recent crises have accelerated the trend, especially in developing countries, where state debt is growing faster.
Thus, today half of the developing nations dedicate more than 1.5% of their gross domestic product (FIB) and 6.9% of their Government income to interest payments, and in 55 of them this last percentage exceeds 10%.
necessary reforms
The UN is committed to an in-depth reform of the entire international financial system, but also stresses that there are short-term measures that can alleviate the situation, including a mechanism that facilitates suspension of payments, longer terms and lower rates for countries struggling, including some middle income.
It also calls for the international community to provide more liquidity in times of crisis using already existing instruments within the framework of the IMF or expanding the multilateral development banks to support investments.