UN Trade and Development calls for rapid debt reforms to prevent ‘defaults'

By Mucahithan Avcioglu

ISTANBUL (AA) - The progress in global development is at risk as the global debt challenges are growing increasingly, according to a report by the UN's Conference on Trade and Development (UNCTAD) on Wednesday.

“Behind us lies a system that needs reform; before us, the chance to build one that serves people and stability, long-term development, not recurring default,” UNCTAD'S Secretary General Rebeca Grynspan said in International Debt Management Conference at Geneva, Switzerland.

In a statement, UNCTAD said developing countries’ external debt hit a record $11.4 trillion, or 99% of their export earnings, and the rising debts force governments to difficult trade-offs, instead of investing in essential infrastructure, education and healthcare.

Approximately 3.3 billion people currently reside in nations where debt repayment costs exceed spending on health care and education combined.

Also, interest payments outweigh climate investments in almost all developing countries, limiting their ability to respond to global challenges.

“This forces countries to choose to default on their development to not default on their debt. No more defaults on debt but yes on development,” Grynspan said.

The statement called for bold action to ensure that debt is an asset for advancement, rather than an obstacle.

"With global cooperation and innovative solutions, countries can break the cycle of unsustainable debt and invest in a more resilient and inclusive future," it added.