On Tuesday, the United Nations Development Program (UNDP) said that 54 developing economies, which account for over half of the world's poorest people, need urgent debt relief as a result of "cascading global crises."
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It warned of the risks of inaction in a new paper, noting that if these countries do not get access to effective debt restructuring, poverty will rise and desperately needed investments in climate adaptation and mitigation will not happen.
The 54 countries with severe debt problems include 28 of the world's top-50 most climate vulnerable nations. Among the countries needing debt relief are, for example, Afghanistan, Argentina, Ecuador, Egypt, El Salvador, Haiti, Pakistan, and Ukraine.
"The international community should not wait until interest rates drop or a global recession kicks in to take action. The time to avert a prolonged development crisis is now," UNDP said.
For wealthy countries, debt relief would be "a small pill" to swallow, yet the cost of inaction is brutal for the world's poorest, said Achim Steiner, administrator of the program.
"We cannot afford to repeat the mistake of providing too little relief, too late, in managing the developing economy debt burden," Steiner said.
The paper laid out a number of policy actions for debt restructuring that could help stop the debt crisis in its tracks, proposing a way forward for the G20's Common Framework for Debt Treatments with the focus on key areas including debt sustainability analysis, official creditor coordination and private creditor participation.
The Common Framework is the main international debt relief offer open today to some countries suffering from debt distress. Effective debt restructuring is only one vital element of ensuring that developing economies have the finances they need to make progress on sustainable development, UNDP said, adding that new sources of funding are urgently needed.