World public debt hits record $92 trillion, UN report reveals

According to a United Nations report, world public debt reached a record figure of 92 trillion dollars in 2022, due to the indebtedness of governments to face crises such as the COVID-19 pandemic, and which are developing countries. They are the ones who are suffering the most from the burden.

The world’s internal and external debt has multiplied by more than five in the last two decades, exceeding the rate of economic growth, since the gross domestic product (GDP) has only tripled since 2002, according to the report on Wednesday, published in on the eve of the G20 meeting of finance ministers and central bank governors, to be held from July 14-18.

Developing countries owe almost 30% of the world’s public debt, of which 70% corresponds to ChinaIndian and Brazil. Fifty-nine developing countries face a debt/GDP ratio above 60%, a threshold indicating high levels of indebtedness.

“Debt has been translating into a substantial burden for developing countries due to limited access to finance, rising borrowing costs, currency devaluations and sluggish growth”, adds the UN report.

In addition, the international financial architecture makes access to financing inadequate and expensive for developing countries, according to the UNwhich indicates that net interest payments on debt exceed 10% of income in 50 emerging economies around the world.

“In Africa, the amount earmarked for interest payments is higher than spending on education or health”, according to the report, with 3.3 billion people living in countries that spend more on debt interest payments than on health or education.

“Countries face the impossible dilemma of paying their debt or serving their population”.

Private creditors, such as bondholders and banks, account for 62% of the total external public debt of developing countries.

In Africathis share of creditors grew from 30% in 2010 to 44% in 2021, while Latin America has the highest proportion of private creditors holding external public debt of all regions, at 74%.

The United Nations noted that multilateral lenders should expand their funding, with measures such as a temporary suspension of International Monetary Fund surcharges (IMF) -commissions charged to borrowers who regularly use their lines of credit- and greater access to financing for countries with debt problems.

A debt renegotiation mechanism is also necessary “to address the slow pace of the G20 Common Framework″, the authors said, without elaborating on how that mechanism should work.

The debt treatment framework was adopted by the Group of 20 largest economies and official creditors in October 2020, and aims to include non-member countries in debt relief.

Source: Reuters