The COVID-19 pandemic, the cost of living crisis and the war in Ukraine have pushed 165 million people into poverty since 2020, the United Nations said on Thursday and called for a moratorium on debt payments for developing countries. Due to these shocks, between the end of 2020 and 2023, 75 million people will fall into extreme poverty, defined as living on less than $2.15 a day – and more than 90 million on $3.65 a day Will come below the poverty line. According to a study published by the United Nations Development Programme.
“The poorest suffer the most and their income is projected to remain below pre-pandemic levels in 2023,” the report said. “Countries that have been able to invest in safety nets over the past three years have prevented vast numbers of people from falling into poverty,” NDP chief Achim Steiner said in a statement. “In highly indebted countries, there is a correlation between high levels of debt, inadequate social spending, and worrying increases in poverty rates.”
The report called for “preventing debt-poverty” in economically struggling countries by “redirecting debt repayments towards financing social spending and countering the effects of macroeconomic shocks.” “The solution is not beyond the reach of the multilateral system,” the report said. Nearly 3.3 billion people, nearly half of humanity, live in countries that spend more on paying interest on debt than on education and health, according to another UN report published on Wednesday.
And developing countries, despite lower levels of debt, are paying more interest, partly because of higher rates. According to the report, the annual cost of lifting 165 million newly poor people out of poverty in 2022 for developing economies would be US$14 billion, or 0.009 per cent of global output and slightly less than 4 per cent of total public external debt service. , The report’s authors estimate that if the income loss to the poor already incurred by the shock is included, the mitigation cost would be approximately US$107 billion, or 0.065 per cent of world GDP, and nearly one per cent of the total external public debt service. Will reach quarter.
“There is a human cost of inaction in not restructuring the sovereign debt of developing countries,” Steiner said. “We need new mechanisms to anticipate and absorb shocks and to make the financial structure work for the most vulnerable.” Earlier this week Secretary-General Antonio Guterres, who has been pushing for reform of international financial institutions, denounced “our outdated global financial system, which reflects the colonial power dynamics of the era when it was created.”
