Some 54 developing countries—representing more than half of the world’s poorest people— urgently need debt relief after being wracked by a “cascading” series of global crises, the United Nations Development Program (UNDP) said in a paper released Tuesday.
Without immediate debt relief, at least 54 countries would see rising poverty levels, and "desperately needed investments in climate adaptation and mitigation will not happen," the UNDP noted. The countries represent little over 3% of the global economy.
"The risks of inaction are dire," the paper showed, with dozens of developing nations suffering from a rapidly escalating debt crisis. The UN agency warned that the debt crisis "could otherwise spill over to a long-term development crisis."
A third of all the developing economies have seen their debt labeled as being "substantial risk, extremely speculative or default," UNDP's chief economist George Gray Molina told reporters, according to an AFP report. Sri Lanka, Pakistan, Tunisia, Chad, and Zambia are at the most immediate risk, he noted.
Many poor, indebted countries find it impossible to repay their debt or access new financing. 19 of the developing countries now effectively shut out of the lending market, 10 more than at the start of the year, the paper showed.
The UNDP suggests a way forward for the Common Framework, an initiative endorsed by the Group of Twenty (G20) during the COVID-19 pandemic to help low-income countries with unsustainable debt. It proposes that the framework shifts focus to "comprehensive restructurings that will allow countries a faster return to growth, financial markets, and development progress."
Debt negotiations under the framework to help heavily-indebted countries find a way to restructure their obligations has been slow, AFP reported.
