Over 3.3 billion people – nearly half of humanity – now live in countries that spend more money on loan interest than on education or health. According to a new United Nations research.
“Half our world is sinking into a development disaster, fuelled by a crushing debt crisis,” UN Secretary General Antonio Guterres told a press conference launching a report on Wednesday on the state of the world’s debt.
“In 2022, global public debt reached a record $92 trillion and developing countries shoulder a disproportionate amount,” the UN chief said.
Because such a “crushing debt crisis” is concentrated mostly in poor developing countries, it is “not judged to pose a systemic risk to the global financial system”, Guterres said.
“This is a mirage,” he said.
Financial markets may not appear to be suffering yet, but billions of people are, and public debt levels “are staggering and surging,” he noted.
According to the analysis, the number of countries with high debt levels has risen dramatically from 22 in 2011 to 59 in 2022. According to Guterres, 52 countries, or over 40% of the developing world, are in acute debt distress.
“In Africa, the amount spent on interest payments is higher than spending on either education or health. Developing countries in Asia and Oceania [excluding China] are allocating more funds to interest payments than to health,” the report states.
“Similarly, in Latin America and the Caribbean, developing countries are devoting more money to interest payments rather than to investment. Across the world, rising debt burdens are keeping countries from investing in sustainable development,” it adds.
Guterres said a growing share of debt is held by private creditors who charge sky-high interest rates to developing countries.
As an example, he cited African countries that on average pay four times more for borrowing than the United States and eight times more than the wealthiest European countries.
