UNCTAD predicts $3.4 trillion in debt for developing countries amid Covid-19
Repayments by developing countries on their public external debt alone will climb between $2.6 trillion and $3.4 trillion in 2020 and 2021, the United Nations Conference on Trade and Development (UNCTAD) has said in a new report while calling for a global debt deal to prevent the Covid-19 pandemic from spreading economic disaster.
“The international community should urgently take more action to relieve the mounting financial pressure that debt payment is placing on developing countries as they grapple with the economic shock of Covid-19,” the secretary said. General of UNCTAD, Mukhisa Kituyi, during the release of the report titled ‘From Great Lockdown to Great Merger. ‘
The world is facing an unprecedented health and economic emergency due to the new coronavirus disease, according to the report. It is developing countries, however, that will be hardest hit with a wall of debt service repayments throughout the 2020s.
In 2020 and 2021 alone, repayments of their public external debt are estimated at nearly $3.4 trillion – between $2 trillion and $2.3 trillion in high-income developing countries and between $666 billion and $1.06 trillion dollars in middle- and low-income countries.
The financial turmoil of the crisis triggered record portfolio capital outflows from emerging economies and steep currency devaluations in developing countries, making servicing their debts more onerous, according to the report.
Countries will struggle to repay their debt on time – the crisis will trigger record outflows of portfolio capital from emerging economies and steep currency devaluations in developing countries, the report says.
“Recent appeals for international solidarity go in the right direction,” said Richard Kozul Wright, director of UNCTAD’s Globalization Division which produced the report, “but have so far provided little tangible support for developing countries as they tackle the immediate impacts of the pandemic and its economic fallout.”
The reports called for automatic temporary freezes, debt relief and program restructuring, as well as an international developing country debt authority to provide macroeconomic “respite” for all stricken developing countries. by the crisis.
On March 30, UNCTAD called for a $2.5 trillion coronavirus program for developing countries. Even before the Covid-19 crisis, many of these countries were facing high and growing shares of their government revenue going to debt repayment, health and social spending cuts.