Thu | Dec 7, 2023

UNDP calls for debt relief for four CARICOM states

Published:Tuesday | October 11, 2022 | 6:19 PM
In a paper titled, “Avoiding ‘Too Little Too Late’ on International Debt Relief,” the UNDP called for rich countries to step in to help the 54 countries. - File photo

BRIDGETOWN, Barbados, CMC – Four Caribbean Community (CARICOM) states are included in 54 countries for which the United Nations Development Programme (UNDP) on Tuesday called for debt relief.

The UNDP said Haiti, Grenada, Suriname and Belize are among the 54 countries that are home to more than half of the poorest people on the planet and need urgent debt relief.

The largest geographical subgroup among the 54 is SubSaharan Africa with 25 countries followed by Latin America and the Caribbean with 10 countries.

In a paper titled, “Avoiding 'Too Little Too Late' on International Debt Relief,” the UNDP called for rich countries to step in to help the 54 countries.

It said without action, poverty will rise and desperately needed investments in climate adaptation and mitigation simply will not happen.

The paper highlights the ripple effects of government responses to the recent economic crisis, and the potential impacts. It explains why debt restructuring cannot wait until interest rates drop, or a global recession occurs.

“Debt relief would be a small pill for wealthy countries to swallow, yet the cost of inaction is brutal for the world's poorest. We cannot afford to repeat the mistake of providing too little relief, too late, in managing the developing economy debt burden,” said Achim Steiner, the UNDP Administrator.

The 54 countries with severe debt problems include 28 of the top 50 most climate-vulnerable nations in the world.

The UNDP said although they are home to more than half of the world's poorest people, they represent little more than three per cent of the global economy.

The paper outlines several policy actions for debt restructuring, noting that a deal could be on the horizon. It notes that markets conditions around the globe are shifting rapidly and UNDP said volatility is being fuelled by “a synchronized fiscal and monetary contraction”, along with low growth.

Currently, nearly 20 developing countries are paying more than 10 percentage points over United States Treasury bond rates to borrow money on capital markets.

At the same time, holders of many developing economy bonds report they are trading at deep discounts ranging from between 40 to 60 cents on the dollar.

UNDP said a debt deal might now be possible as these conditions encourage private creditors to negotiate debt relief under a Common Framework elaborated by the G20 group of countries, the world's largest economies.

This week, G20 finance ministers will meet in Washington, DC, ahead of the annual meetings of the World Bank and the International Monetary Fund and UNDP said it believes conditions are ripe for creditors and debtors to kickstart debt restructuring talks under the G20 framework.

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