If We Get the Ball Rolling on SDGs, We Could Shave Off $148 Billion in Debt – Just Throwin’ It Out There!
Developing economies could secure up to $148 billion in savings if the international community restructures their existing debt and expands access to future affordable finance, the UN Development Programme (UNDP) said in a policy brief published on Wednesday.
The report – Building blocks out of the crisis: The UN’s SDG Stimulus Plan – was issued ahead of the G20 Finance Ministers and Central Bank Governors Meeting in Bangalore, India, which begins on Friday.
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UNDP has called for action to protect developing nations from the impact of today’s overlapping crises while also ensuring that financing is aligned to support a just, inclusive, and equitable global transition.
Transform global finance
“The building blocks to transform the global financial system are already being discussed at the G20 – multilateral development bank reform, debt restructuring, and injections of liquidity – but with the fracture between developed and developing countries escalating rapidly, we need to move from words to action,” said Achim Steiner, the UNDP Administrator.
The policy brief identified 52 low and middle-income developing economies that are either in debt distress or at high risk of debt distress. Collectively, they account for more than 40 per cent of the world’s poorest people.
A 30 per cent cut in their 2021 public external debt stock could help to save up to $148 billion in debt service payments over eight years, according to the report.
High debt burdens
UNDP said 25 developing economies currently have external debt service payments higher than 20 per cent of total revenue – the highest number of countries in more than two decades – which impacts spending on essential services, including measures to adapt and respond to climate change.
“The countries most burdened by debt and lack of access to financing are also being battered by multiple other crises; they are among the most affected by the economic impact of COVID-19, poverty, and the accelerating climate emergency,” said Mr. Steiner.
“The time has come to address the deepening chasm between rich and poor countries, to change the multilateral landscape and to create a debt architecture that is fit for purpose in our complex, interconnected, and post-COVID world,” he added.
SDG stimulus plan
The policy brief revealed how “significant fiscal space” can be freed by expanding access to lower cost and long-term maturity funding – two of the focus areas included in the UN Secretary-General’s Stimulus Plan for the Sustainable Development Goals (SDGs), launched last week.
The 17 SDGs provide a blueprint for a more just, equitable, and “green” future, and have a deadline of 2030.
George Gray Molina, UNDP Chief Economist, argued that developing economies simply cannot fund progress on the Goals, or climate commitments, if they are borrowing at up to 14 per cent while also paying more than 20 per cent of revenue for debt servicing.
“The billions of savings identified by UNDP can only happen if we collectively agree that it is time to de-risk development and climate financing,” he said.
The brief further showed how an additional $120 billion in savings could be generated by “refinancing” the bond debt of middle-income countries to official creditor rates.
It also highlighted the potential for lowering the cost of borrowing for investments aligned with the SDGs and the Paris Agreement on climate change.
Elliot is an award-winning journalist passionate about international affairs and humanitarian causes. Elliot has covered stories from conflict zones and areas devastated by disasters, highlighting critical global issues.
Developing economies could indeed secure up to $148 billion in savings if the international community restructures their existing debt and expands access to future affordable finance. UN Development Programme (UNDP) making a crucial point in their policy brief. It is time for concrete action to support a just, inclusive, and equitable global transition.
The UNDP seems to be suggesting some ambitious measures to address debt issues in developing economies. While restructuring debt and expanding access to finance sound great on paper, the practical implementation and impact on these nations need to be thoroughly assessed. Let’s hope the international community takes concrete steps to ensure the proposed strategies truly benefit those in need.
Do you think the proposed measures in the policy brief will be enough to address the debt distress in the 52 identified developing economies?
Yes, I believe the proposed measures outlined in the policy brief have the potential to alleviate the debt distress in the 52 identified developing economies. It is crucial for the international community to take decisive action to restructure existing debt, increase access to affordable finance, and ensure a just transition towards a more equitable global financial system.
I believe that developing economies stand to benefit greatly from the restructuring of their existing debt and increased access to affordable finance. The international community should take concrete actions to support these nations and ensure a fair and inclusive global financial system. It’s time to move beyond discussions and implement real solutions to address the challenges faced by low and middle-income countries.
As a financial analyst, I believe restructuring debt and ensuring access to affordable finance for developing economies is crucial for sustainable growth and recovery. The international community must take concrete actions to support these countries in the midst of overlapping crises.
It’s imperative that we prioritize restructuring existing debt and expanding access to affordable finance for developing economies. The potential savings of up to $148 billion could make a significant impact on their financial stability and well-being. Let’s take concrete actions to support a just, inclusive, and equitable global transition as outlined by the UNDP. I fully support moving from discussion to implementation to address the crises faced by these nations. – EmilyJohnson42
Do you think restructuring existing debt and expanding access to affordable finance is a sustainable solution for developing economies to achieve savings as mentioned in the article?
Restructuring existing debt and expanding access to affordable finance can indeed be a viable solution for developing economies to achieve significant savings. It provides the opportunity to alleviate financial burdens and promote economic stability in a sustainable manner.
As Achim Steiner mentioned, it is crucial to take immediate action to restructure debt and enhance access to affordable finance for developing nations. The global financial system must be transformed to ensure a just and equitable transition. The policy brief highlights the urgency for multilateral development bank reform and debt restructuring. Let’s move from discussions to concrete actions to support these economies in need.
It’s high time we prioritize restructuring debt and expanding financial access to help developing economies secure savings. Action is needed to safeguard these nations and ensure a fair global transition. The proposals must be turned into concrete steps for real impact.
It’s fascinating to see the potential for such substantial savings projected by the UNDP if the international community takes proactive steps to address debt restructuring and financing access for developing economies. The urgency highlighted in the policy brief makes it clear that action is needed to ensure a just and equitable transition globally.
It’s high time for concrete actions to be taken to alleviate the debt burden on developing economies. Restructuring and expanding access to affordable finance can make a significant difference and pave the way for a more just and inclusive global transition. Let’s hope that the discussions at the G20 translate into tangible outcomes for the nations in need.