A UN body asked world finance ministers to provide debt forgiveness programs to developing nations, claiming the COVID-19 epidemic and the ensuing rise in borrowing prices and inflation had contributed to an additional 165 million people living in poverty.
According to the UN Development Program, the increase meant that more than 20% of the world’s population, or over 1.65 billion people, were now struggling to put food on the table and surviving on less than $3.65 per day.
Next week’s conference of the Group of 20 finance ministers in India will focus on eradicating poverty as well as revamping the most important multilateral organizations and the global debt architecture. The administrator of UNDP Achim Steiner referred to the rise in poverty as worrying.
“What this means is that the government is no longer able to pay its teachers; the government is no longer able to employ doctors and nurses in hospitals; and the government is unable to provide the medicines for rural health centers,” he told reporters.
According to UNDP, all 165 million more people living in poverty are in low-income or lower-middle-income nations.
Before the pandemic, poverty rates had been steadily declining, but they have subsequently increased. Due to rising interest rates, poorer countries now spend two to three times as much of their income servicing debt as wealthy ones do, and around 2.3 times as much on interest payments as on social assistance.
According to Steiner, the UNDP is urging a “Debt-Poverty Pause” so that the most severely affected nations may concentrate their resources on vital social spending. It would be comparable to the now-defunct Debt Service Suspension Initiative (DSSI), which the G20 established to aid less developed nations during COVID-19.
As per the UNDP, 25 low-income countries spent more than 20% of their income on debt servicing in 2017. It was the greatest number to reach that barrier since 2000, and if global interest rates keep rising, they may go up much more.
According to Steiner, “the debt burden has become unsustainable, particularly for low-income countries.” One of several UN objectives to address some of the most pervasive issues affecting mankind by 2030 is the eradication of poverty.
To facilitate a more equal allocation of resources, UN Secretary-General Antonio Guterres has called for a comprehensive overhaul of the global financial system.
According to research released this week, emerging nations are responsible for over 30% of the $92 trillion in global government debt.