UN flags alarming debt burden: Half the world stifled in education, health crisis

Nearly half of the world's population, approximately 3.3 billion people, now reside in nations where debt payments outweigh investments in education and health, as highlighted in a damning United Nations report.

UN Secretary-General Antonio Guterres, speaking at a press conference unveiling the report, minced no words in describing the dire situation: "Half our world is descending into a catastrophic development nightmare, fuelled by a crushing debt crisis."

Guterres underscored the gravity of the issue by revealing that global public debt reached an unprecedented $92 trillion in 2022, with developing countries bearing the brunt of this burden. However, despite the severity of this "crushing debt crisis," Guterres emphasised that it is primarily confined to impoverished developing nations and is therefore not deemed a significant threat to the global financial system.

“This is a mirage,” he said. Financial markets may seem not to be suffering yet – but billions of people are and the levels of public debt “are staggering and surging”, he added. The report highlights a drastic surge in the number of countries grappling with high debt levels, skyrocketing from 22 nations in 2011 to a staggering 59 in 2022. UN Secretary-General Antonio Guterres underscored the alarming statistics, revealing that a distressing total of 52 countries, representing nearly 40 per cent of the developing world, find themselves in dire straits when it comes to debt.

The report unveils a distressing reality across various regions. "In Africa, the amount spent on interest payments surpasses investments in education or health. Developing countries in Asia and Oceania [excluding China] allocate more funds to interest payments than to healthcare," states the report, unflinchingly highlighting the skewed priorities. The situation is no different in Latin America and the Caribbean, where developing nations prioritise interest payments over crucial investments.

UN Secretary-General Antonio Guterres shed light on a troubling trend, noting that an increasing portion of the debt is held by private creditors who mercilessly impose exorbitant interest rates on developing countries. To illustrate the magnitude of the disparity, Guterres highlighted those African countries, on average, pay four times more in interest rates than the United States and a staggering eight times more than the wealthiest European nations.

The report emphasises that public debt has reached "colossal levels" primarily due to two factors. Firstly, countries faced mounting financial needs as they grappled with the compounded crises of the COVID-19 pandemic, soaring living costs, and the relentless impact of climate change. Secondly, the global financial architecture has inadequately and expensively limited developing countries access to financing, exacerbating their struggles.

Guterres revealed a troubling assessment by the International Monetary Fund, indicating that 36 countries are currently in or at high risk of "debt row," while an additional 16 nations are burdened by unsustainable interest rates from private creditors. Altogether, a staggering 52 countries, representing almost 40 per cent of the developing world, find themselves mired in severe debt trouble.

A regional analysis by the UN further confirms the severity of the situation. From 2010 to 2022, government debt surged by nearly fourfold in Asia and the Pacific, threefold in Africa, 2.5 times in Europe and Central Asia, and 1.6 times in Latin America and the Caribbean, as revealed by Armida Alisjahbana, executive secretary of the UN Economic and Social Commission for Asia and the Pacific, during a press briefing. The numbers paint a grim picture of mounting debt burdens suffocating nations across the globe.