Photo: OLIVIER DOULIERY / AFP / Getty Images
By: The Opinion Updated 12 Dec 2022, 10: 23 pm EST
The problems and debt levels of the poorest countries of the world have increased in the last two years making its foreign debt almost unpayable.
A r A report recently published by the World Bank (WB), reveals that the so-called Developing countries that can obtain International Development Association (IDA) loans currently spend more than one tenth of their export earnings on debt service Long-term public external and with public guarantee.
That is “ the highest proportion since the year 2015, shortly after the Heavily Indebted Poor Countries (HIPC) Initiative was established” , read in and report.
The report highlights the growth ent debt-related risks for all developing economies, both low-income and middle-income, as by the end of 2022, the external debt of these economies amounted to 9 trillion dollars
, more than double that of a decade ago.
The rise in interest rates and the slowdown in world growth, highlights the WB , run the risk of bringing a large number of countries into a debt crisis . About 46% of the poorest countries are already at high risk of suffer a debt crisis or have already suffered one.
“The debt crisis facing developing countries has intensified“, declared the President of the World Bank Group, David Malpass.
At the end of 2019 , long-term public debt service payments and publicly guaranteed external debt of IDA-eligible countries amounted to 17.804 million dollars, which is equivalent to 07,3% of its exports of goods and services and 1, 8% of their gross national income (GNI), according to the report.
The UN also throws warning
The same day the WB report was released, the United Nations Conference on Trade and Development (UNCTAD) warned that developing countries face a “impossible compromise” on the debt.
The growing debt of low- and middle-income countries has endangered their chances of development sustainable, as Rebeca Grynspan, head of UNCTAD, the United Nations agency for trade facilitation, has warned.
In Geneva, Rebeca Grynspan affirmed that between 80% and 80% of the debt of emerging and low-income countries is denominated in currencies, situation which has made them very vulnerable to major currency crises that affect public spending.
The levels of public debt as a percentage of GDP increased in more than 80 developing countries between and 2019, according to UNCTAD. Excluding China, this increase is estimated at about 2 trillion dollars.
“This has not happened because of the bad behavior of a country. This has occurred due to systemic shocks that have hit many countries at the same time,” said Grynspan.
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