The 54 countries with the greatest debt problems are home to 50% of the poorest people in the world

The 54 economies with the most pressing debt problems are home to half of the world’s poorest people and require immediate access to restructuring or relief to avoid a systemic development crisis, the United Nations Development Program (UNDP) said on Tuesday.

In a new analysis, the UNDP indicated that the debt burden worsened seriously for those countries as consequence of the serial crises derived from the pandemic and warned that it is imperative to act immediately.

If these nations – which represent just over 3% of the global economy – do not have access to an effective restructuring of their debt, poverty will increase and urgently needed investments in climate adaptation and mitigation will not be madeespecially as the affected countries are among the world’s most climate-vulnerable.

A pebble for the rich countries

“Debt relief would be a pebble for rich countries, but the cost of inaction is brutal for the poorest of the world. We cannot afford to repeat the mistake of providing too little relief too late in managing the debt burden of developing economies,” said Program Managing Administrator Achim Steiner.

According to the report, debt restructuring can’t wait until interest rates go down or there is a global recession.

The document highlighted the volatility of market conditions given widespread factors such as synchronized fiscal and monetary contraction and low growth. He detailed that 19 developing economies are paying more than 10 percentage points on US Treasuries to obtain credit in the capital markets.

The crisis, a consequence of the policies of developed countries

The UNDP explained that the debt crisis has deteriorated in part as a result of the internal policies of the rich countries, which have caused interest rates in developing economies to skyrocket and that investors flee those nations.

Furthermore, this occurs while developing economies have large financing gaps to fight climate change. The 54 countries most vulnerable to debt include 28 of the 50 most climate vulnerable nations.

Many of the poorest and most debt-ridden countries are also among the most vulnerable to climate events.

The conditions exist for a restructuring

On the eve of the G20 finance ministers meeting in Washington this week, the UN agency argued that the conditions exist for creditors and debtors start talks of debt restructuring under the G20 Common Framework and thus avoid a debt crisis for developing countries that could otherwise turn into a long-term development crisis.

UNDP advocated for comprehensive restructuring that allow countries a faster return to growth, as well as financial markets and development.

The study argued that effective debt restructuring is vital to ensure developing economies have the finances they need. to advance sustainable developmentbut stressed that new sources of financing are also urgently needed for these countries to invest in climate adaptation and mitigation.