Global public debt warning from the UN
The United Nations (UN) warned about the record-breaking global public debt of 97 trillion dollars and called for urgent reform in the international financial system against the “alarming increase” that affects development, especially in developing countries.
According to the United Nations report titled “A world debt 2024: A growing burden on global prosperity”, global public debt increased by 5.6 trillion dollars compared to the previous year, reaching 97 trillion dollars in 2023.
Public debt in developing countries increased twice as fast as in developed countries. Especially in Africa, the number of countries where the debt to Gross Domestic Product (GDP) ratio is over 60 percent increased from 6 to 27 in the 2013-2023 period.
Public debt in developing countries has increased sharply, reaching $29 trillion in 2023. It was observed that more than 75 percent of the public debt of these countries originates from Asian and Oceanian countries, 17 percent from Latin America and the Caribbean, and 7 percent from African countries.
While debt repayment is becoming more costly all over the world due to increasing interest rates, this situation has started to negatively affect developing countries disproportionately.
Developing countries paid $847 billion in net interest in 2023. This amount was a 26 percent increase compared to the amount they paid in 2021. These countries borrowed internationally at rates 2 to 4 times higher than the USA and 6 to 12 times higher than Germany.
The rapid increase in borrowing costs has limited the budgets of developing countries. 54 developing countries, almost half of them in Africa, had to allocate at least 10 percent of their public funds to pay interest on the debt.
High interest payments have outpaced growth in key public spending such as health, education and climate action. In developing countries, where approximately 3.3 billion people live, one in every three countries is forced to spend more on interest payments than they spend on these areas that are critical for human development.
Warning that the global financial system is not in a position to meet the needs of the world in the 21st century and that this situation poses a significant challenge for sustainable development, the UN said that in order to accelerate sustainable development, the high cost of debt and the increasing risks of debt distress should be combated and affordable long-term financing for development should be greatly increased. and proposed a roadmap focused on expanding emergency financing for countries in need.
The UN said developing countries should not be forced to choose between paying off their debts or serving their people, and called for the international financial system to change to ensure a prosperous future for people and the planet.