Speaking in Geneva, Rebeca Grynspan said\u00a0that between 70 and 85 per cent of the debt that emerging and low-income countries are responsible for, is in a foreign currency.<\/p>\n
This has left them highly vulnerable to the kind of large currency shocks that hit public spending \u2013 precisely at a time when populations need financial support from their governments.<\/p>\n
Ms. Grynspan \u2013 speaking at the 13th<\/sup>\u00a0UNCTAD Debt Management Conference<\/a>\u00a0– explained that so far this year, at least 88 countries have seen their currencies depreciate against the powerful US dollar, which is still the reserve currency of choice for many in times of global economic stress.<\/p>\n And in 31 of these countries, their currencies have dropped by more than 10 per cent.<\/p>\n This has had a hugely negative impact for many African nations, where the UNCTAD chief noted that currency depreciations have increased the cost of debt repayments \u201cby the equivalent of public health spending in the continent\u201d.<\/p>\n The event, which runs from 5 to 7 December in Geneva and online, takes place as a wave of global crises has led many developing countries to take on more debt to help citizens cope with the fallout.<\/p>\n Government debt levels as a share of GDP increased in over 100 developing countries between 2019 and 2021, said UNCTAD. Excluding China, this increase is estimated at about $2 trillion.<\/p>\n \u201cThis has not happened because of the bad behavior of one country. This has happened because of systemic shocks that have hit many countries at the same time,\u201d\u00a0Ms. Grynspan said<\/a>.<\/p>\n With interest rates rising sharply, the debt crisis is putting enormous strain on public finances, especially in developing countries that need to invest in education, health care, their economies and adapting to climate change.<\/p>\n \u201cDebt cannot and must not become an obstacle for achieving the 2030 Agenda<\/a> and the climate transition the world desperately needs”, she argued.<\/p>\n UNCTAD advocates for the creation of a multilateral legal framework for debt restructuring and relief.<\/p>\n Such a framework is needed to facilitate timely and orderly debt crisis resolution\u00a0with the involvement of all creditors, building on the debt reduction programme established by the Group of 20 major economies (G20) known as the Common Framework.<\/p>\n WFP Bolivia\/Anan\u00ed Chavez<\/p>\n<\/p><\/div>\n An indigenous Guarani woman from the Tentaguasu Community of the Bolivian Chaco weaving with palm leaves, December 2021. Bolivia’s foreign minister has called on countries to support UNCTAD’s platform of debt reforms.<\/p>\n<\/div>\n \u201cWe must support UNCTAD’s call for a reform of international monetary and financial governance,\u201d Bolivian President Luis Acre said in a statement delivered by the country\u2019s finance minister, Marcelo Montenegro.<\/p>\n Mr. Montenegro called for re-examining key aspects of the international financial architecture, including the debt sustainability assessments that serve as a basis for negotiations between debtors and creditors in relation to debt restructuring.<\/p>\n As debt burdens rise, developing country governments end up in a vicious circle, unable to invest in achieving the Sustainable Development Goals<\/a> (SDGs) and grow their economies, making it even harder to pay their debts.<\/p>\n If a country defaults, the terms of debt restructuring are usually set by groups of creditors competing to get the best terms, rather than giving priority to economic and developmental concerns, or how sustainable it is to keep up with payments.<\/p>\n \u201cTo resolve these issues equitably, this needs to be done in a manner that maintains the debtor countries\u2019 ability to grow and meet its current and future debt obligations, while also fulfilling its commitments to the SDGs,\u201d Sri Lankan President Ranil Wickremesinghe said in a statement delivered by the country\u2019s permanent representative in Geneva, Ambassador Gothami Silva.<\/p>\n \u201cI believe that the United Nations is best placed to find solutions to this end,\u201d Ms. Silva said.<\/p>\n UNCTAD said that if the median increase in rated sovereign debts since 2019 were fully reflected in interest payments, then governments would pay an additional $1.1 trillion on the global debt stock in 2023, estimates show.<\/p>\n This amount is almost four times the estimated annual investment of $250 billion required for climate adaptation and mitigation in developing countries,\u00a0according to an UNCTAD report<\/a>.<\/p>\n \u201cThe anachronistic global financial architecture inhibits timely access to affordable development and climate finance,\u201d Belize\u2019s finance minister, Christopher Coye, said ahead of the conference.<\/p>\n At UNCTAD\u2019s debt management conference, Barbados\u2019 finance minister, Ryan Staughn, said the world needed to find a solution to the debt crisis \u201cthat allows countries to be able to continue to respond to the climate crisis without getting ourselves into trouble.\u201d<\/p>\n \u201cI need not tell you the difference between borrowing to build a school or polyclinic versus borrowing to build an airport or a seaport, which have totally different objectives,\u201d Mr. Staughn said in a statement delivered on behalf of Prime Minister Mia Amor Mottley.<\/p>\n UN Photo\/Ariana Lindquist<\/p>\n<\/p><\/div>\n Prime Minister Mia Amor Mottley of Barbados addresses a meeting on Implementation of the Global Accelerator on Jobs and Social Protection at UN Headquarters. In an UNCTAD conference address she urged the world not to neglect the climate crisis when considering debt restructuring. <\/p>\n<\/div>\n UNCTAD promotes multilateral solutions in the areas of capacity-building, debt transparency and debt crisis resolution and relief.\u00a0<\/p>\n The organization is supporting countries through its\u00a0Debt Management and Financial Analysis Programme (DMFAS)<\/a>, one of its most successful technical assistance initiatives.<\/p>\n The initiative offers countries proven solutions for managing debt and producing reliable data for policymaking, said UNCTAD. Since its establishment over four decades ago, DMFAS has supported 116 institutions \u2013 mainly finance ministries and central banks \u2013 in 75 countries.<\/p>\n One example is\u00a0Chad<\/a>, which in January 2022 became the first country to officially request debt restructuring under the\u00a0 G20\u2019s Common Framework.<\/p>\nDebt burden equivalent to health spending total<\/strong><\/h2>\n
![\"An](\"https:\/\/global.unitednations.entermediadb.net\/assets\/mediadb\/services\/module\/asset\/downloads\/preset\/Libraries\/Production%20Library\/25-04-22_WFP_Bolivia_Anani_Chavez.jpg\/image1170x530cropped.jpg\" "\\"An")
<\/div>\nVicious debt circle<\/h2>\n
Deflecting from the climate crisis<\/strong><\/h2>\n
![\"Prime](\"https:\/\/global.unitednations.entermediadb.net\/assets\/mediadb\/services\/module\/asset\/downloads\/preset\/Libraries\/Production%20Library\/23-09-2022-UN-Photo-UN7954928-Mottley.jpg\/image1170x530cropped.jpg\" "\\"Prime")
<\/div>\nMultilateral solutions<\/h2>\n