New UN forum aims to tackle developing nations' debt woes – Reuters

A new forum, supported by the United Nations and designed to address the most pressing debt problems in developing countries, was launched on Wednesday. This comes as policymakers warned that ever-increasing economic pressures are diverting vital funds from much-needed investments, UNN reports with reference to Reuters.

DetailsThe Seville Debt Forum, led by Spain and presented during the 16th session of the UN Conference on Trade and Development (UNCTAD) in Geneva, aims to bring together creditors and borrowers, as well as international financial institutions and academics.

The forum’s goal is to find solutions and develop actions on issues ranging from debt management to sustainable development, as global public debt levels reach new records.

“It’s a trade-off when you have to service your debt, the cost of which in many cases exceeds 10% of GDP, and that means sacrifices in terms of public education, healthcare opportunities, or even investing in your future.”

UN Secretary-General António Guterres called for swift and fair debt solutions, expressing his support for these initiatives.

“Loans must work for, not against, developing countries. But countries are collapsing.”

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Global public debt reached a record $102 trillion in 2024, with developing countries owing $31 trillion and paying $921 billion in interest alone, according to an UNCTAD press release.

About 3.4 billion people – or more than 40% of the world’s population – now live in countries that spend more on debt servicing than on health or education, the agency said, and an urgent and systemic response is needed to address this situation.

“The main goal is not just another report, it’s a report that can then be combined with technical assistance and a very close connection, in particular, with debtor countries, so that we can have quality implementation on the ground and help in some way to build a more sustainable system.”

Developing countries spend $1.4 trillion annually on debt servicing, and 61 of them spent 10% or more of their government revenues on interest payments last year.

“Countries should never have to choose between servicing their debt and serving their people,” Guterres said.

UNCTAD Secretary-General Rebeca Grynspan stated, however, that there has been no major sovereign default since 2022, and debt-burdened countries are coping with the problem by cutting development budgets and investments in health, schools, and infrastructure.

“It’s a slow erosion of development, one budget cut at a time… What we have now is constant crisis management, masked as normality,” she said.

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How to solve debt problems for developing countries has been a pressing issue for many years. Forums such as the Global Sovereign Debt Roundtable have sought to make progress on key issues and streamline processes, as a number of countries from Ghana to Zambia and Ethiopia have struggled to emerge from prolonged sovereign debt defaults.

Debt experts warn that the situation for many developing countries, especially the poorest, is worsening amid cuts in aid and development funding by wealthy countries, from the US to Europe, in favor of defense spending.

The Group of 20 leading economies, led by South Africa, has pledged to focus on developing countries’ debt issues. However, the group’s presidency will pass to the US in a few weeks.

The Seville Debt Forum is one of the initiatives that emerged from the decade-long Conference on Financing for Development, which took place in the Spanish city in June.