The crushing burden of debt financing for many emerging countries has hampered their recovery from the COVID-19 pandemic, forced progressive spending cuts and limited their ability to respond to further shocks, according to a new report released by the United Nations.
The 2022 report on Financing Sustainable Development: Closing the Financial Gap shows that while rich countries have been able to sustain their recovery from the pandemic with record amounts borrowed at ultra-low interest rates, poorer countries have spent billions on debt servicing, preventing them from making an investment in sustainable development.
The surprise of the pandemic pushed another 77 million people into extreme poverty in 2021 and, until the end of the year, many economies remained below pre-2019 levels. not to return to the 2019 degrees until the end of 2023, even before absorbing the effects of the war in Ukraine.
“As we approach the halfway point towards financing the world’s Sustainable Development Goals, the findings are alarming,” said UN Deputy Secretary-General Amina Mohammed. “There is no excuse for, at this critical moment of collective responsibility, to ensure that many millions of others are lifted out of hunger and poverty. We will need to invest in access to decent and green jobs, social protection, physical care and education, leaving no one behind. »
Closing the monetary hole indicates that, on average, the poorest emerging countries pay 14% of their source of interest income on their debt, almost four times more than developed countries, with 3. 5%. Globally, many emerging countries have been forced to cut budgets for education, infrastructure and other capital expenditures as a result of the pandemic. The war in Ukraine will exacerbate those demanding situations and create new ones, with higher energy and commodity prices, additional supply chain disruptions, high inflation along with declining growth. and increased volatility in money markets.
“The evolved world has shown over the past two years that millions of other people can lift themselves out of poverty through the right kind of investment: in infrastructure, social coverage or resilient and blank public services,” said UN Under-Secretary-General Liu Liu. Zhenmin, head of the Department of Economic and Social Affairs, who prepared the report. “The foreign grid will have to build on this progress and ensure that emerging countries can invest at similar levels, while reducing inequalities and ensuring sustainable power. transition. “
The report notes that there has been progress in poverty reduction, social coverage and investment in sustainable progression in 2021, driven by movements in developed countries and some of the major emerging countries, $17 trillion in emergency expenditures related to COVID-19. Positive results include:
The report also notes a record expansion in officially progressive assistance (ODA), which reached its highest point ever recorded in 2020, reaching $161. 2 billion. However, thirteen countries had cut ODA and the sum was still inadequate for the immense desires of emerging countries. The UN fears that the fallout from the crisis in Ukraine, with increased spending on refugees in Europe, could result in relief in aid to poorer countries. In the face of a global crisis, short-term movements and more foreign ones are needed. to save you from debt crisis and cope with the higher burden of borrowing.
However, the vast majority of emerging countries will want to be active and pressing to get back on track and achieve the Sustainable Development Goals. The report estimates that in the poorest countries, a 20% increase in spending will be needed for key sectors.
Bridging the Finance Divide recommends movements in 3 areas:
The report is a joint product of the Inter-Agency Working Group on Financing for Development, which includes more than 60 UN agencies and foreign organizations. The Financing for Sustainable Development Office of the United Nations Department of Economic and Social Affairs serves as editor. chief and coordinator of the implementing organization, in close cooperation with the World Bank Group, IMF, the World Trade Organization, UNCTAD and UNDP. The implementing organization is mandated by the Addis Ababa Action Agenda and chaired by Mr. Liu Zhenmin, UN Under-Secretary-General for Economic and Social Affairs. The full copy of the report can be downloaded at: https://developmentfinance. un. org/fsdr2022
The report’s bureaucracy is the basis for discussion in the follow-up to the ECOSOC Forum on Financing for Development, where Member States discuss the measures needed to mobilize sustainable finance. Negotiations based on the report are ongoing. Fair, which brings together government representatives and investors.
The report covers, among others, areas of the global economic context; Commerce; debt, personal affairs and finances; Technology; and cooperation of foreign progression.