52 nations in or near debt distress, risking default: UNDP chief

By Al Mayadeen English
Source: Agencies
5 Mar 09:27

The UNDP chief says the current situation for developing countries when it comes to the national debt is "indeed very, very serious."

UNDP head Achim Steiner in the Sudanese capital Khartoum during his visit to the country, Jan. 29, 2020 (AFP)

A top UN official has warned that "urgent" measures are needed to help 52 countries facing debt repayment problems that put some at risk of default.

Achim Steiner, head of the United Nations Development Programme (UNDP), told AFP that 25 countries of the 52 were spending more than a fifth of government revenues servicing external debt.

"The situation right now for developing countries when it comes to national debt is indeed very, very serious," Steiner highlighted in an interview on the sidelines of the Least Developed Countries (LDCs) summit in Doha on Saturday.

The UN agency estimates that "52 countries are either in debt distress or one step away from debt distress and potential default," he noted.

Steiner did not name the countries involved, but the UNDP, last week, released a report which called for a 30% write-off of external debt for 52 countries at 2021 values.

The 52 included Argentina, Lebanon, and Ukraine, alongside 23 countries from sub-Saharan Africa, 10 from Latin America and the Caribbean, and eight from East Asia and the Pacific.

Steiner said, "The financial markets are not paying enough attention" as the 52 countries account for only three percent of global external debt, but one-sixth of the world's population.

According to the UNDP chief, 25 countries spending one-fifth of government revenues on debt servicing is "not sustainable".

"Therefore, we have called very clearly for urgent ways to inject liquidity while also restructuring and rescheduling debts, because otherwise we may see country after country falling into that territory of debt distress," he indicated.

Guterres urges developed countries to allocate 0.2% of income to least developed countries

UN Secretary-General Antonio Guterres called on developed countries on Sunday to allocate part of their gross national income to assist the least developed countries.

"It’s also high time that developed countries live up to their commitment to provide Least-Developed Countries with 0.15 – 0.20 per cent of their Gross National Income for Official Development Assistance," Guterres said at the 5th UN Conference on Least Developed Countries in Qatar.

Guterres added that the population of the least developed countries was facing significant challenges in key areas of life, including health, education, social protection, and job creation, especially amid rising food and energy prices.

"We have put forward an SDG Stimulus to gather the world around the need to provide at least 500 billion US dollars a year to developing countries," Guterres said.

He also noted the need to direct efforts to combat tax evasion and money laundering in order to prevent the depletion of countries' financial resources.

African countries lost up to 20 years of development progress

On Saturday, UN Secretary-General Antonio Guterres criticized the world's rich countries and energy giants for burdening least developed countries (LDCs) with "predatory" interest rates.

Poor nations' debt has multiplied over the past decade because of the coronavirus pandemic, high food and fuel bills, and financial crises. Several have defaulted over the past two years.

Steiner pointed out that African countries, such as Nigeria, Mali, and Burkina Faso have lost up to 20 years of development progress amid a rise in political violence and government failures to provide basic services, security, health, and education, failing to mention the repercussions of the French troops' interference in already-struggling countries.

He added that total debt was difficult to establish as more than 60% is owed to private creditors.

"Now you have the war in Ukraine, you have the impact on the global food and energy prices and particularly when it comes to debts, the impact of inflation is driving interest rates up," the top UN official explained.

According to Steiner, rising fuel costs have caused "a short-term shock" for countries struggling to maintain basic fiscal stability, and they face growing pressure to invest in renewable energy and combating climate change.

"Inevitably, the ability of poorer countries and middle-income countries to significantly expand in clean energy infrastructure... is being affected," he said, calling for greater international investment in "clean and affordable electricity" for poorer nations.