World News | UN calls for stronger multilateral solution to debt crisis

Geneva [Switzerland]7 December (ANI): Stronger multilateral solutions are urgently needed to address the challenges facing developing countries, UNCTAD Secretary-General Rebecca Greenspan said at the opening of the organization’s 13th Debt Management Conference. Debt crisis.

The event, held in Geneva from 5 to 7 December, comes at a time when waves of global crises are causing many developing countries to take on more debt to meet the needs of their populations.

Read also | Arizona: Polygamist leader Samuel Bateman had 20 wives, many of them minors, the FBI said.

Government debt levels as a percentage of gross domestic product rose in more than 100 developing countries between 2019 and 2021, UNCTAD said in a statement. Excluding China, this increase is estimated at about $2 trillion.

“This did not happen because of bad behavior by one country. It happened because of systemic shocks that hit many countries at once,” Greenspan said in her statement.

Read also | North Korea has publicly executed two teenagers for “heinous crimes” they committed watching South Korean films.

With interest rates rising sharply, the debt crisis is putting enormous pressure on public finances, especially in developing countries that need to invest in education, health care, the economy and adaptation to climate change.

“In the context of the pandemic, geopolitical instability and climate crisis, virtually all developing countries have to face impossible trade-offs,” Greenspan said. “Debt cannot and must not be the key to achieving the 2030 Agenda and obstacles to the climate transition the world desperately needs.”

In the statement, UNCTAD advocated for a multilateral legal framework for debt restructuring and relief.

Such a framework is needed for a timely and orderly resolution of the debt crisis with the participation of all creditors, building on the debt reduction plan known as the Common Framework developed by the Group of 20 major economies (G20).

“We must support UNCTAD’s call to reform international monetary and financial governance,” Bolivian President Luis Aker said in a statement issued by the country’s Finance Minister Marcelo Montenegro.

Montenegro called for a re-examination of key aspects of the international financial architecture, including the debt sustainability assessment that forms the basis for negotiations between debtors and creditors on debt restructuring.

As debt burdens mount, governments in developing countries end up in a vicious circle, unable to invest in achieving the Sustainable Development Goals (SDGs) and growing their economies, making debt repayments even more difficult.

President Ranil Wickremesinghe of Sri Lanka said on January 17, 2018: “To address these issues equitably, it needs to be done in a way that sustains growth and the ability of debtor countries to meet their current and future debt obligations, while fulfilling their commitment to the Sustainable Development Goals. commitment,” said Ambassador Gothami Silva, the country’s permanent representative in Geneva.

“I believe the United Nations is in the best position to find a solution for this,” Silva said.

If the median increase in sovereign debt ratings since 2019 was fully reflected in interest payments, governments would pay an additional $1.1 trillion in 2023 on the global debt stock, according to UNCTAD estimates.

This amount is almost four times the estimated annual investment of US$ 250 billion required for climate adaptation and mitigation in developing countries, according to an UNCTAD report.

“An anachronistic global financial architecture hinders timely access to affordable development and climate finance,” said Belize Finance Minister Christopher Coy. Coy addressed the sixth session of the UNCTAD Intergovernmental Group of Experts on Financing for Development, which took place from 30 November to 2 December.

Speaking at UNCTAD’s debt management conference, Barbados Finance Minister Ryan Stone said the world needed to find a solution to the debt crisis “that would allow countries to continue to address the climate crisis without getting bogged down.”

“I don’t need to tell you the difference between borrowing money to build a school or a general hospital and borrowing money to build an airport or a seaport, both have completely different goals,” Storn said on behalf of Prime Minister Mia Amore Motley said in a statement released.

Greenspan also drew attention to the impact of the currency composition of debt on public budgets against the backdrop of a strengthening dollar. The International Monetary Fund estimates that 70% of debt in emerging countries and 85% in low-income countries is in foreign currencies.

Because governments in developing countries spend in their own currency and borrow in foreign currency, this structure makes public budgets highly vulnerable to sharp currency depreciations.

By the end of November 2022, at least 88 countries have devalued against the dollar this year. Thirty-one of these countries experienced depreciations of more than 10%. In most countries in Africa, such devaluation-increased debt-servicing requirements are equivalent to the continent’s public health spending, Greenspan said.

“The scale of these numbers shows the systemic nature of the problems we face. Systemic problems require systemic solutions,” she said. (Arnie)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)