UN chief warns that half the world is plunging into a debt crisis, signaling alarming global trends.

New Delhi: UN Secretary General Antonio Guterres launched a UN report on Wednesday which revealed that global public debt reached a record $92 trillion in 2022, with developing countries shouldering a disproportionate amount. According to the report titled ‘A World of Debt’, India has a debt burden of $2.8 trillion. In comparison, China’s debt stands at nearly $14 trillion, while the United States’ debt is a staggering $30 trillion. Developing countries account for almost 30% of the total debt, with China, India, and Brazil responsible for approximately 70% of it.

The report highlighted that public debt has grown faster in developing countries compared to developed nations over the last decade. As a result, the number of countries facing high levels of debt has risen from 22 in 2011 to 59 in 2022.

UN Secretary General Guterres emphasized that this debt crisis is causing a development disaster, particularly in poor countries. He stated that although these unsustainable debts do not pose a systemic risk to the global financial system, they are a systemic failure affecting 3.3 billion people. Guterres warned that while markets may not be suffering, the people are.

Here are 10 important points from the report:

★Global public debt has increased from $17 trillion in 2000 to $92 trillion in 2022.
★Developing countries account for almost 30% of global public debt.
★Public debt is growing at a faster rate in the developing world.
★52 developing countries have public debt exceeding 60% of their GDP.
★Developing countries pay significantly higher interest rates compared to developed countries.
★African countries pay four times more for borrowing than the US and eight times more than the wealthiest European countries.
★Interest payments are growing faster than other public expenditures, with some regions spending more on servicing debt than on development.
★3.3 billion people live in countries that spend more on debt interest than on health or education.

The International Monetary Fund has identified 36 countries at high risk of debt distress, with another 16 paying unsustainable interest rates to private creditors. A total of 52 countries, nearly 40% of the developing world, are facing serious debt trouble.

The UN chief attributed this inequality in the global financial system to the colonial power dynamics of the past. While acknowledging that debt can drive development, he highlighted that when countries are forced to borrow for survival, debt becomes a trap that perpetuates more debt.

To address this crisis, the United Nations has proposed a roadmap of multilateral actions, including tackling the high cost and risks of debt distress, scaling up affordable long-term financing for development, and expanding contingency financing for countries in need. Implementing these actions is crucial to creating a more prosperous, inclusive, and sustainable world.

The report underscores the urgent need for global cooperation and support to alleviate the debt burden on developing countries, enabling them to prioritize investments in education, health, and the well-being of their people.