Dozens of countries need urgent debt relief as interest rates rise and the global economy slows. If 54 developing countries do not cancel part of their debt, global poverty will increase sharply, according to the United Nations Development Program. In addition, these countries will not be able to invest in measures that mitigate the impact of climate change.
The United Nations is making this appeal in response to a new report on international debt. More than half of people living in extreme poverty live in countries with alarmingly high debt levels, according to the United Nations Development Programme.
The problems became acute as central banks in the US, the eurozone and other rich countries raised interest rates. As a result, borrowing for developing countries or emerging economies becomes much more expensive, because their debt securities suddenly become less attractive, and government bonds from rich countries, which are considered safe, also generate a lot of returns.
According to the United Nations Development Program, 19 developing countries have to pay lenders so much interest than the United States that they are practically barred from obtaining new credit. The organization calls on rich countries to find solutions. In addition to writing off debts, special clauses regarding loans to poor countries can also help.
Private lenders are often willing to discuss debt restructuring in developing country debt crises. But according to economist George Gray Molina of the United Nations Development Program, rich countries with outstanding loans often fail.
The climate crisis is making help even more urgent. Among the developing countries at risk of high debt burdens, 28 are in the top 50 list most vulnerable to climate change.
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