over the past decade, public debt in developing countries has grown faster than in developed countries
[ad_1]
Around 3.3 billion people around the world live in countries that spend more on paying interest on their debt than on health care and education, according to the United Nations World of Debt report. 48 developing countries in Africa and the Asia-Pacific region have to choose between servicing public debt and fulfilling obligations to citizens, analysts say.
According to the UN, in 2022 the global public debt reached $92 trillion. It has more than quintupled since 2000, outpacing global GDP growth, which tripled over that period. At the end of last year, developing countries accounted for about 30% of the total amount of debt – about two-thirds of this share was the debt of China, India and Brazil.
At the same time, over the past decade, public debt in developing countries has grown faster than in developed ones. Note that they are forced to borrow more actively, including the consequences of the pandemic and Russia’s military operation in Ukraine (see Kommersant dated April 8, 2021 and December 28, 2022). On average, in developing countries, according to analysts, the ratio of public debt to GDP is more than 60% (see chart), which indicates a high level of debt. 36 such countries are on the “debt list”, that is, they are either on the verge of a crisis or are already experiencing it.
The UN emphasizes that among the entities providing loans, the share of private creditors (in particular, banks and bondholders) is growing, and servicing such debts is much more expensive for developing countries than for developed ones. Thus, lending rates for African countries are on average four times higher than for the United States, and eight times higher than for Germany.
Due to the continuing rise in the cost of borrowing and the process of devaluation of currencies against the backdrop of weak economic growth, the debt burden on developing countries is “unsustainable”, analysts conclude. The UN formulated its proposals for its reduction in the “road map” to ensure global financial stability (it will be presented later). Recommendations include longer loan terms and lower rates for vulnerable countries. The organization hopes that these ideas will be discussed in detail in September at the G20 summit in Delhi.
[ad_2]
Source link