UN’s ‘World Of Debt’ Reveals How African Nations Are Weighed Down By Interest Payments
. Continent Where Public Debt Is Growing Faster Than GDP
By Sulaimon Salau
Latest Reports by the UN Trade and Development (UNCTAD), tagged “World Of Debt” has revealed that about 769 million Africans live in countries where interest payments outweigh investments in education or health.
The reports, obtained by Slye News, stated that in Africa, the average person’s spending on interest is $70 , which surpasses that of education ($60) and health ($39) per capita.
The UN noted that the alarming surge in global debt burden calls for urgent reforms to the international financial systems to safeguard a prosperous future for both people and the planet.
Globally, it estimated that the public debt has reached record $97 trillion in 2023.
Over three-quarters of this debt is owed by countries in Asia and Oceania, while Latin America and the Caribbean accounts for 17% and Africa for just 7%.
It stated that the burden of this debt varies significantly with countries’ ability to repay it and is exacerbated by the inequality embedded in the international financial architecture: Those least able to afford it end up paying the most.
Although public debt is growing in all regions, it declared that only in Africa it is growing faster than GDP
In the report, the United Nations sounded the alarm over the escalating debt burdens to global prosperity.
Titled ”A world of debt 2024: A growing burden to global prosperity”, the report highlights the unprecedented surge in public debt – comprising both domestic and external general government borrowing – which reached a historic peak of $97 trillion in 2023, up by a notable $5.6 trillion from the previous year.
Particularly in Africa, faltering economies in the wake of multiple global crises have resulted in a heavier debt burden.
The number of African countries with debt-to-GDP rations above 60% has increased from 6 to 27 between 2013 and 2023, according to the report.
Meanwhile, it stated that repaying debt has become more costly, and this is hitting developing countries disproportionately.
“In 2023, developing nations paid $847 billion in net interest, a 26% increase from 2021. They borrowed internationally at rates two to four times higher than the U.S. and six to 12 times higher than Germany.
“The rapid rise in interest costs is limiting budgets in developing countries. Presently, half of them designate a minimum of 8% of government revenues to debt servicing, a number that has doubled in the last ten years.
‘Moreover, in 2023, a historic 54 developing nations, with almost half in Africa, dedicated a minimum of 10% of government funds to debt interest payments,” it stated.
The report revealed that 3.3 billion individuals reside in nations where interest payments exceed spending on either education or health.
The report proposed a plan to revamp the global financial system and boost the UN’s Sustainable Development Goals (SDG) stimulus package to tackle the current debt crisis.
These will entail efforts to: Improve the effective participation of developing countries in the governance of global financial systems.
Other measures include: “Tackle the rising cost of debt and risk of debt distress through an effective debt workout mechanism.
“Expand contingency finance to provide greater liquidity in times of crisis, so that countries are not forced into debt as a last resort.
“Massively scale up affordable and long-term financing by mobilizing multilateral development banks and private resources,” it stated.
