UN: Global public debt reaches unprecedented levels; developing countries the most affected

Global public debt rose to a record $97 trillion last year, the United Nations reported Tuesday, and developing countries owe about a third of that, limiting their ability to pay for basic government services like medical care, education and actions to combat climate change.

The United Nations Conference on Trade and Development, formerly known as UNCTAD, said the value of money owed by governments has increased by $5.6 trillion since 2022. In its report titled “A World of Debt,” the agency indicated that high interest payments are outpacing growth in essential public spending.

“Developing countries should not be forced to choose between servicing their debt or serving their people,” the report states. “The international financial architecture must change to ensure a prosperous future for both people and the planet.”

In the developing world, home to 3.3 billion people, 1 in 3 countries spends more on interest payments than on programs in “critical areas for human development” such as healthcare, education and climate action.

In 2023, public debt in developing countries will reach $29 trillion, about 30% of the global total, up from a share of 16% in 2010, the U.N. office said.

The United Nations Conference on Trade and Development mentioned that “cascading crises” and the slow and uneven performance of the global economy supported the rapid increase in global public debt, which is growing at twice the rate in developing countries. development paths than in the richest.

The United States, according to the report, led the world with more than $33 trillion in public debt last year, followed by China with nearly $15 trillion and Japan with $10.6 trillion. Egypt, Mexico, Brazil and India joined China among developing countries with the most public debt.

However, global shocks have rattled economies in Africa, where average public debt as a proportion of economic output rose to 62% last year.

When the cost of borrowing rose in many parts of the world last year, interest on public debt rose to $847 billion, a 26% increase compared with two years earlier, the U.N. office said.

During a visit to the United States last month, Kenyan President William Ruto and his American counterpart Joe Biden urged economies around the world to reduce the enormous debt burden crushing developing nations, as with the reduction of financial barriers and the coordination of debt relief through multilateral financial institutions.

A $1.2 trillion government financing bill passed by Congress in March allows the United States to lend up to $21 billion to an International Monetary Fund trust that provides interest-free loans to support low-income countries. .

“Too many nations are forced to choose between development and debt, between investing in their people and paying their creditors,” Biden said.

The African Union, a new permanent member of the G20, has also been outspoken on the issue. South Africa will take over the G20 presidency in December, saying it will be “an opportunity to champion the aspirations of emerging markets.”

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