As global growth is expected to be weaker than expected, pointing to a global economic slowdown, developing countries face mounting debt and insufficient international support, according to a report released Wednesday by the United Nations Conference on trade and development (UNCTAD).
Faced with this situation, the United Nations body in charge of trade and development calls for a bold international economic program to avoid another lost decade for developing countries.
UNCTAD points out that many developing countries face “an increasingly severe development crisis” as soaring debt levels and rising debt service costs reduce investment productive in the public and private sectors.
Over the past decade, debt servicing costs have steadily increased relative to government spending on essential services. The number of countries spending more on servicing the external public debt than on health care thus rose from 34 to 62 during this period, deplores the UN body.
At the beginning of this year 2023, food inflation remains high, despite a drop in headline inflation, with 25% to 62% of the headline figure attributable to food inflation. The combined impact of higher interest rates and higher energy and food prices, in the context of lower fiscal support, is expected to further weaken household spending, notably on housing.
Faced with this worrying picture, UNCTAD calls for a bold program to support developing countries. This requires, according to her, a revision of the global debt architecture, an increase in liquidity and a strengthening of financial regulations.
To respond adequately to the needs of developing countries, the multilateral financial agenda must be strengthened, with an urgent focus on reforming the debt architecture, she continued, calling for the establishment of a multilateral debt management mechanism from both creditors and debtors, and improved debt sustainability analyzes that incorporate development and climate-related financing needs.
The UN’s trade and development body says the upcoming IMF-World Bank meeting offers a valuable opportunity to boost financing for development and address the constraints facing countries that need more of cash.
And to conclude, the issuance of new Special Drawing Rights (SDRs) worth at least $650 billion would be a positive first step to help alleviate the heavy debt burden that is hampering development prospects.
By OMA Newsletter N° 1130 of 13/04/2023
Article published under the direction of Dr. Najib Kettani
The OMA, NGO with an Intercontinental vocation
For the development of cultural exchanges
Valuing human potential
The promotion and consolidation of Africa’s development, and
Inter-African integration
