The world faces acute debt sustainability problems in the wake of the deadly coronavirus crisis, which threatens to push developing countries into an escalating wave of hunger, poverty, social unrest and conflict, United Nations Secretary-General Antonio Guterres has warned.
“The response to the epidemic and the financial aspects of the crisis was fragmented, and geopolitical divisions did not help, as its scope was very limited and it was too late,” Guterres said, in statements to the British newspaper, “The Financial Times.”
The fact that only six countries defaulted on their external debts last year – Argentina, Belize, Ecuador, Lebanon, Suriname and Zambia – created the illusion of stability and a false perception of the gravity of the situation, Guterres said.
Large and middle-income developing countries, such as Brazil and South Africa, have borrowed heavily from domestic lenders rather than foreign investors, at interest rates much higher than those available to rich countries, making the risks less pronounced than in previous emerging market debt crises, Guterres said. .
Brazil, in particular, has shortened the average maturities of government bonds issued in local currency sharply from five and a half years before the crisis to only two years in 2020, which reduces the cost of the debt, but means that it must be paid off more quickly, which is the case. A problem in the event of a crisis.
The World Bank estimates that about 120 million Prime Time Zone have been pushed into poverty by the epidemic, with the majority of the new poor residing in middle-income countries.
The article The UN Secretary-General warns of an upcoming debt crisis for the developing world was written in the Al-Borsa newspaper.