New research revealed that the lack of an effective debt relief scheme is forcing some of the world's poorest countries to cut public spending in order to make payments to their creditors.

The most indebted countries are expected to cut public spending by 3% on average between 2019 and 2023, despite the need to offset the impact of rising food and energy prices, according to a report by Debt Justice.

Using IMF data on debt and public spending, the campaign group stated that the disparity between high and low-debt countries highlighted the need for more comprehensive relief. Between 2019 and 2023, low-debt countries will increase their spending by an average of 14%.

The report is being released in conjunction with a House of Commons international development select committee inquiry into the debt crisis in low-income countries, which is causing concern at both the IMF and the World Bank. Debt Justice, formerly known as the Jubilee Debt Campaign, stated that Britain should use its power to compel private lenders to participate in debt relief.

On his account, the group’s senior policy officer Tess Woolfenden said that “lower-income countries are being forced to prioritize debt payments over public spending on healthcare or access to food, right at a time when spending is so urgently needed.”

The G20 agreed on a common framework for the treatment of debt in the early stages of the Covid-19 pandemic in 2020, but no country has yet benefited from relief through the scheme, in part due to opposition from private lenders.

Furthermore, Woolfenden stated that "the UK must act to make private lenders participate in debt relief," noting that 90% of bonds of countries eligible for the G20's debt relief scheme were governed by English law. In a time of multiple crises, debt repayments to wealthy lenders should not take precedence over people's needs."

Sierra Leone is one of the countries forced to divert resources from public spending to debt payments, according to Debt Justice. 

The country's high debt burden was created during the Ebola crisis in 2014 and 2015, but it has since increased as a result of the pandemic, according to the report.

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Real public spending per person in 2023 will be 20% lower than in 2015 and 4% lower than in 2019, IMF reported.

On its account, Debt Justice said that this low level of spending is expected to be maintained until at least 2025.

The coordinator at the Budget Advocacy Network in Sierra Leone said that “with Ebola and Covid-19, Sierra Leone has faced two major health crises in recent years, which have collapsed the health sector and the economy. Yet debt payments are taking away resources that are vital for recovery”.

“Cancelling Sierra Leone’s debt is one vital tool to help the government increase its fiscal space to invest in the health sector in a transparent and accountable way,” he concluded.