The UNCTAD (United Nations Conference on Trade and Development) is urging for the writing off of close to $1 trillion debts owed by developing countries across the world. The move seeks to cushion the said countries from the negative impacts of the global COVID-19 pandemic.
According to the UN agency, about 64 low-income countries are currently spending more on debt service than their health systems, at a time when there is a record global downturn, decreasing prices for oil and commodities exports, and weakening local currencies.
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In its report urging for the debt write off, UNCTAD estimates the countries’ liquidity and financing requirements as a result of the pandemic to amount to at least $2.5 trillion.
Reuters reports that high-income developing countries have debt service obligations of between $2 to $2.3 trillion in 2020 and 2021 alone, while middle and low-income countries have debt service obligations of $700 billion to $1.1 trillion.
According to the agency, an independent debt authority would oversee the process as opposed to the IMF and World Bank, which are among developing countries’ leading creditors and, therefore, not objective.
Already, officials from the G20 countries (Group of 20 major economies) have announced plans to suspend both principal repayments and interest payments on loans for the world’s poorest countries. The waiver will last up to the end of the year.
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