Cascading global crises have left 54 countries ― home to more than half of the world's poorest people ― in dire need of debt relief, the UN has said.
As a result, dozens of developing nations are facing a rapidly deepening debt crisis and that “the risks of inaction are dire”, the UN Development Programme said in a report.
Without immediate relief, at least 54 countries will report rising poverty levels, and “desperately needed investments in climate adaptation and mitigation will not happen”.
This is worrisome since the affected countries are among the most climate-vulnerable in the world, the UNDP said.
The agency's report, published on Tuesday ahead of meetings of the International Monetary Fund, the World Bank and G20 finance ministers in Washington, highlighted the need for swift action.
But despite repeated warnings, “little has happened so far, and the risks have been growing,” UNDP chief Achim Steiner told reporters in Geneva.
“That crisis is intensifying and threatening to spill over into an entrenched development crisis across dozens of countries across the world,” he said.
The poor, indebted countries are facing converging economic pressures and many find it impossible to pay back their debt or gain access to new financing.
“Market conditions are shifting rapidly as a synchronised fiscal and monetary contraction and low growth are fuelling volatility around the globe,” the UNDP said.
The agency said debt troubles had been brewing in many of the affected countries long before the Covid-19 pandemic hit.
“The rapid build-up in debt over the past decade has been consistently underestimated,” it said.
Morocco's last nomads struggle to adapt to climate change ― in pictures
-
Amazigh Ida Ouchaali at an encampment near the village of Amellagou, where some of the last people to keep Morocco's nomadic traditions reside. They say their ancient lifestyle has become impossible to sustain as climate change brings ever more intense droughts. All photos: AFP -
Amazigh Ida Ouchaali belongs to a community of about 25,000 people at the last census in 2014. Its numbers are down by two-thirds in a decade. -
Amazigh tents near the village of Amellagou in Morocco. Ida Ouchaali's tribe spent centuries roaming the country to find food for their animals, but their way of life is steadily disappearing. Ms Ouchaali says she is 'exhausted' by her fight for survival. -
Amazigh women in Amellagou carry out their daily chores. -
An Amazigh man poses for a picture next to a herd of sheep near the village of Amellagou. Water for livestock is hard to find and the harsh climate threatens his way of life. -
Amazigh families at Amellagou worry about the future of their children. One teenager says the young want to 'turn the page on nomadism'. -
Amazigh Moha Ouchaali is in his 50s. 'Everything has changed,' he says. 'I don't recognise myself anymore in the world of today.' -
An Amazigh boy and his belongings in the Moroccan desert. -
Children of Amazigh families grow up in a shrinking community. At one time there were nearly 500 tents around the village of Amellagou but now there are less than a tenth of that. -
Each generation of Amazigh face social and economic changes that make their lives more difficult. Laws passed by Morocco that would defend the nomadic way are simply ignored by other people, they say. -
Amazigh sheltering at Amellagou say they recall a time when nomadic people were welcomed by settled communities but such hospitality is largely gone. -
Driss Skounti says he has little hope for the future. 'Nomadic life has an identity and a tradition steeped in history, but is doomed to disappear within 10 years.'
The freeze on debt repayment during the Covid-19 crisis to lighten their burden has expired and negotiations under the G20 Common Framework, which was created during the pandemic to help heavily-indebted countries to find a path to restructure their obligations, have been moving at a snail's pace.
According to available data, 46 of the 54 countries had amassed public debt totalling $782 billion in 2020, the report said.
Argentina, Ukraine and Venezuela alone account for more than a third of that amount.
The situation is deteriorating rapidly, with 19 of the developing countries now effectively shut out of the lending market — 10 more than at the start of the year.
Meanwhile, the debt of a third of all the developing economies has been labelled as being “substantial risk, extremely speculative or default,” UNDP chief economist George Gray Molina told reporters.
The countries at the most immediate risk are Sri Lanka, Pakistan, Tunisia, Chad and Zambia, he said.
Mr Gray Molina said private creditors had so far been the biggest obstacle to moving forward with needed restructuring.
But he suggested that the current market conditions could pave the way for a debt deal, as private creditors see the value of their holdings plunge by as much as 60 per cent.
“When emerging market bonds trade at 40 cents on the dollar, private creditors suddenly become more open to negotiation,” he said.
“The incentives are to now join a negotiation where you might accept the haircut of 20 cents on the dollar, 15 cents on the dollar and 30 cents on the dollar.”
But willing creditors are not enough to actually nail down a much-needed debt-relief agreement, Mr Gray Molina said.
“The missing ingredients at this moment are financial assurances from major creditor governments to clinch a deal.”
Mr Steiner, who has repeatedly raised the alarm about the crisis, voiced hope that the international community might finally recognise that action is in everyone's shared interest.
“Prevention is better than treatment and certainly … much, much cheaper than having to deal with a global recession,” he said.
