The United Nations has warned that the world’s unprecedented debt threatens the global economy.
by Stefan Bos, Worthy News Correspondent
NEW YORK/GENEVA/BUDAPEST (Worthy News) – The United Nations has warned that the world’s unprecedented debt threatens the global economy.
In a new report monitored by Worthy News, the U.N. notices that public debt, including “domestic and external general government borrowing,” reached “a historic peak of $97 trillion in 2023,” up by $5.6 trillion from the previous year.
The report titled” A world of debt 2024: A growing burden to global prosperity” clarifies that the debt burden will be unsustainable for billions of people.
The report estimates that 3.3 billion individuals reside in nations where interest payments exceed spending on either education or health.
“In Africa, the average person’s spending on interest ($70) surpasses that of education ($60) and health ($39) per capita. A staggering 769 million Africans live in countries where interest payments outweigh investments in either education or health, accounting for nearly two-thirds of the entire population,” the report said.
Particularly in Africa, “faltering economies in the wake of multiple global crises have resulted in a heavier debt burden. The number of African countries with debt-to-[Gross Domestic Product] GDP rations above 60 percent has increased from 6 to 27 between 2013 and 2023.”
HUGE INTEREST PAYMENTS
Yet repaying debt has become more costly, hitting developing countries “disproportionately,” the U.N. researchers claim.
“In 2023, developing nations paid $847 billion in net interest, a 26 percent increase from 2021. They borrowed internationally at rates two to four times higher than the U.S. and six to 12 times higher than Germany.”
The rapid rise in interest costs is limiting budgets in developing countries, Worthy News learned.
“Presently, half of them designate a minimum of 8 percent of government revenues to debt servicing, a number that has doubled in the last ten years,” the report warns.
“Moreover, in 2023, a historic 54 developing nations, with almost half in Africa, dedicated a minimum of 10 percent of government funds to debt interest payments.”
The U.N. says the debt burden also undermines the fight against “global warming” that its scientists claim is caused by humans.
“With the crisis intensifying, actions to limit global warming to 1.5 Celsius (34.7 Fahrenheit) become urgent,” the report stresses.
COUNTRIES URGENCY
“Despite this urgency, developing countries are currently allocating a larger proportion of their GDP to interest payments (2.4 percent than to climate initiatives (2.1 percent). Debt is limiting their capacity to tackle climate change.”
The report proposes an overhaul of the world’s financial system and the availability of faster cash for poorer developing nations.
“Expand contingency finance to provide greater liquidity in times of crisis, so that countries are not forced into debt as a last resort,” is one of the advises.
The report proposes “a plan to revamp the global financial system and boost the U.N. Sustainable Development Goals (SDG) stimulus package to tackle the current debt crisis.”
Yet, with the world debt approaching $100 trillion, it remained unclear whether that amount could ever be printed or how much could be forgiven in global debt relief.
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