Global public debt hits record $97trn in 2023, UN urges action
Omeiza Bilal
The United Nations has raised the alarm over escalating debt burdens vis-à-vis global prosperity.
In a new report titled ”A world of debt 2024: A growing burden to global prosperity”, the global body highlighted the unprecedented surge in public debt – comprising both domestic and external general government borrowing – which reached a historic peak of $97 trillion in 2023, up by a notable $5.6 trillion from 2023.
The report was prepared by the Global Crisis Response Group technical team at UN Trade and Development (UNCTAD).
The UN in the report noted that particularly in Africa, faltering economies in the wake of multiple global crises have resulted in a heavier debt burden.
“The number of African countries with debt-to-GDP ratios above 60% has increased from 6 to 27 between 2013 and 2023.
“Meanwhile, repaying debt has become more costly, and this is hitting developing countries disproportionately,” the report noted.
In 2023, developing nations paid $847 billion in net interest, a 26% increase from 2021. They borrowed internationally at rates two to four times higher than the U.S. and six to 12 times higher than Germany.
“The rapid rise in interest costs is limiting budgets in developing countries. Presently, half of them designate a minimum of 8% of government revenues to debt servicing, a number that has doubled in the last ten years.
“Moreover, in 2023, a historic 54 developing nations, with almost half in Africa, dedicated a minimum of 10% of government funds to debt interest payments.
“With the crisis intensifying, actions to limit global warming to 1.5°C become urgent. Despite this urgency, developing countries are currently allocating a larger proportion of their GDP to interest payments (2.4%), than to climate initiatives (2.1%). Debt is limiting their capacity to tackle climate change,” the report revealed.
The report revealed that 3.3 billion individuals reside in nations where interest payments exceed spending on either education or health.
In Africa, the average person’s spending on interest ($70) surpasses that of education ($60) and health ($39) per capita. A staggering 769 million Africans live in countries where interest payments outweigh investments in either education or health, accounting for nearly two-thirds of the entire population.
To arrest the drift and ensure sustainable development, the UN in the report proposed a plan to revamp the global financial system and boost the UN’s Sustainable Development Goals (SDG) stimulus package to tackle the current debt crisis.
Accordingly, the UN called for the effective participation of developing countries in the governance of global financial systems.
“Tackle the rising cost of debt and risk of debt distress through an effective debt workout mechanism.
“Expand contingency finance to provide greater liquidity in times of crisis, so that countries are not forced into debt as a last resort.
“Massively scale up affordable and long-term financing by mobilizing multilateral development banks and private resources,” it said.
