The United Nations Conference on Trade and Development is calling for urgent measures to address the debt burden estimated at $3.4tn in Nigeria and other developing countries facing economic disaster as a result of the coronavirus pandemic. UNCTAD in a report released on Thursday said developing countries were facing a looming debt disaster as most of the revenue of these countries had shrunk.
The report is entitled ‘from the great lockdown to the great meltdown: developing country debt in the time of Covid-19.’ Analysts at the UN agency estimated that in 2020 and 2021 alone, repayments on the public external debt were estimated at nearly $3.4tn, comprising between $2tn and $2.3tn in high-income developing countries and between $666bn and $1.06tn in middle- and low-income countries.
The report said more systematic, transparent and coordinated measures towards writing off developing country debt across the board were urgently needed. It suggested that a trillion-Dollar write-off would be closer to the figure needed to prevent economic disaster across the developing world. It noted that prior to the COVID-19 crisis, a huge percentage of many of these government revenues were expended on debt repayments, squeezing health and social expenditures.
The UN agency had on March 30, called for a $2.5tn coronavirus crisis package for developing countries. “The international community should urgently take more steps to relieve the mounting financial pressure that debt payments are exerting on developing countries as they get to grips with the economic shock of COVID-19,” UNCTAD Secretary-General, Mukhisa Kituyi, said.
According to the UNCTAD, the coronavirus pandemic hits developing economies at a time when they had already been struggling with unsustainable debt burdens for many years, as well as with rising health and economic needs.
It noted that Nigeria, Ghana, Pakistan and some middle and high-income developing countries had been excluded from recent debt relief packages, despite facing unsustainable debt burdens and potential financial meltdowns. “Recent calls for international solidarity point in the right direction,” Director of UNCTAD’s globalisation division that produced the report, Richard Kozul-Wright, said, “but have so far delivered little tangible support for developing countries as they tackle the immediate impacts of the pandemic and its economic repercussions.”
The UNCTAD report proposed the establishment of an International Developing Country Debt Authority to oversee their implementation and lay the institutional and regulatory foundations for a more permanent international framework to guide sovereign debt restructurings in the future. According to the report, this could follow the path of setting up an autonomous international organisation by way of an international treaty between concerned states. It said the swift establishment of an advisory body of experts with entire independence of any creditor or debtor interests was essential to such international agreement.