Global public debt has reached an all-time high of $92 trillion, according to a recently released report by the United Nations. The alarming figure highlights the growing burden of debt faced by countries around the world, particularly developing nations. The report, titled “A World of Debt,” underscores the challenges posed by escalating external debts, cascading crises, and the rising costs of borrowing.
UN Secretary-General Antonio Guterres expressed concern over the dire situation, noting that nearly 40% of the developing world is grappling with serious debt issues. He highlighted that in some countries, debt interest payments exceed spending on crucial sectors such as education and health. Guterres emphasized the need for sustainable debt practices, cautioning that when countries are forced to borrow merely to survive, debt becomes a vicious cycle.
The report further exposes the disproportionate burden faced by developing countries. Despite having significantly less debt compared to their developed counterparts, developing nations often pay considerably higher interest rates. Guterres revealed that African countries, on average, pay four times more for borrowing than the United States and eight times more than the wealthiest European nations.
Moreover, the study identifies 59 developing countries with a debt-to-GDP ratio surpassing the 60% threshold, signaling high debt levels. This number has surged from 22 countries in 2011, underscoring the growing debt crisis faced by many nations.
The United Nations report highlights the urgent need for reform in the global financial system. While substantive changes will take time, the secretary-general proposed immediate measures to address the issue. One such measure is the establishment of a debt workout mechanism that supports payment suspensions, longer lending terms, and reduced interest rates, particularly for vulnerable middle-income countries.
The report’s findings shed light on the complex dynamics of public debt and its implications for global economic stability. It calls for concerted multilateral action to alleviate the burden of debt, expand affordable long-term financing for development, and enhance contingency financing for countries in distress.
As global public debt continues to surge, it is crucial for governments, financial institutions, and international organizations to work together to address this pressing challenge. Failure to do so could have far-reaching consequences for economies and the well-being of billions of people worldwide.
By: Montel Kamau
Serrari Financial Analyst
18th July, 2023
photo source Google
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