Debt service burden forcing poor to make tough choices, UN official says

Many of the world's poorest countries are having to cut other investments to service debts, UN Development Programme (UNDP) administrator Achim Steiner said on Monday.

Speaking at an event in Hamburg, Steiner added the financial crunch meant countries worldwide were struggling to meet their sustainable development goals.

“Many least developed countries have been priced out of the financial markets. They cannot borrow any more money,” Steiner told the Hamburg sustainability conference, adding they must draw down other spending to avoid debt default.

“It's an extreme situation.”

Countries such as Ghana, Sri Lanka and Zambia have defaulted on their debt in recent years, while others are struggling to make payments after the global interest rate hiking cycle sent borrowing costs higher.

At the same time, the world needs trillions of dollars more per year to meet climate spending goals. Steiner said boosting financing was “absolutely central” to meeting sustainable development goals — something the UNDP is monitoring.

“We have to tackle this issue of our international financial architecture and our international financial system,” Steiner said. “If not, we are going to fall apart in our endeavour to find answers that our citizens are expecting us to find.”

Reuters