The UN trade and development body set out urgent measures needed to head off a looming debt disaster in developing countries reeling from the economic fallout from the coronavirus pandemic.
UNCTAD released a report that calls for a global debt deal for the developing world. It underlines the vital need for decisive action to provide substantive debt relief to developing countries to free up sorely needed resources to respond to the raging pandemic.
On 30 March, UNCTAD called for a $2.5 trillion coronavirus crisis package for developing countries. Even prior to the COVID-19 crisis, many of these countries faced high and rising shares of their government revenues going to debt repayments, squeezing health and social expenditures.
“The international community should urgently take more steps to relieve the mounting financial pressure that debt payments are exerting on developing countries as they get to grips with the economic shock of COVID-19,” said UNCTAD Secretary-General Mukhisa Kituyi.
The coronavirus pandemic hits developing economies at a time when they had already been struggling with unsustainable debt burdens for many years, as well as with rising health and economic needs.
According to the report, developing countries now face a wall of debt service repayments throughout the 2020s. In 2020 and 2021 alone, repayments on their public external debt are estimated at nearly $3.4 trillion – between $2 trillion and $2.3 trillion in high-income developing countries and between $666 billion and $1.06 trillion in middle- and low-income countries.
UNCTAD outlines three key steps to translate the calls into action:
Step 1: Automatic temporary standstills
Step 2: Debt relief and restructuring programmes
Step 3: An international developing country debt authority
Read and download the UNCTAD report: Developing Country Dept in the Time of COVID-19.
Original source: UNCTAD
Published on 23 April 2020
