By Jerry Omondi
At least 54 developing countries globally, including 25 in Sub-Saharan Africa, require immediate debt relief to avoid sliding into extreme poverty, according to the United Nations’ Development Programme (UNDP).
The Agency published a paper on October 11 titled ‘Avoiding ‘Too Little Too Late’ on International Debt Relief’, which highlights the ripple effects of government responses to the recent economic crisis and warns of the potential impacts.
It noted that against this bleak backdrop, the paper lays out a number of policy actions for debt restructuring that could help stop the debt crisis in its tracks.
“Not providing the debt relief needed will come at great human cost, as these 54 countries account for close to 18 percent of the global population and more than 50 percent of all people living in extreme poverty,” the paper explained.
The UNDP said rich countries have the resources to end the debt crisis, which has deteriorated rapidly in part as a consequence of their own domestic policies.
“Debt relief would be a small pill for wealthy countries to swallow, yet the cost of inaction is brutal for the world’s poorest,” said Achim Steiner, UNDP Administrator. “We cannot afford to repeat the mistake of providing too little relief, too late, in managing the developing economy debt burden.”
The UNDP paper proposes a way forward for the Common Framework on debt restructuring, focusing on key areas: debt sustainability analysis, official creditor coordination, private creditor participation, and the use of state-contingent debt clauses that target future economic and fiscal resilience.
The Agency proposes that the Common Framework shifts focus to comprehensive restructurings that will allow countries a faster return to growth, financial markets, and development progress.
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