Global public debt hit record levels in 2022. Many countries are caught in the debt trap. UN Secretary-General Guterres calls for action.
According to the United Nations, 52 poorer countries are stuck in a debt trap that they can hardly get out of without help. UN Secretary-General António Guterres warned in New York today: “Half the world is sinking into a development disaster, driven by a devastating debt crisis.”
Public debt reaches $92 trillion worldwide
Guterres presented the UN report “World of Debt”. According to this, in 2022 public debt will have reached a record value of 92 trillion dollars (around 82.5 trillion euros). That is five times as much as in 2000. Poor countries account for a disproportionately high proportion of this. A good 40 percent of the world’s population, i.e. around 3.3 billion people, live in countries in which the interest payments on loans exceed the expenditure on health or education, it says.
Borrowing is in itself a means of developing economies, for example investing in health care, education and job creation. But when the sums are enormous and interest rates rise, governments can be in dire straits. “Some of the poorest countries in the world are being forced to choose between servicing the debt and serving their people,” Guterres said.
African countries paid four times as much interest as the US and eight times as much as rich European countries, Guterres said. In addition, many countries have borrowed more and more money from private lenders in recent years. The complicated procedure to restructure or possibly partially forgive debt.
U.N-general secretary demands global security system
In order to protect poorer countries from falling, there must be a functioning global security system. States need more opportunities to borrow money from public entities such as development banks. Specifically, Guterres called for a mechanism to temporarily suspend interest payments, stretch debt and lower interest rates. It would also help if rich countries increased development aid and paid the promised money for climate adaptation.
The report comes from a working group dealing with the consequences of the global crises in food prices, energy and debt (UN Global Crisis Response Group on Food, Energy, and Finance – GCRG). Guterres launched it in March 2022.