The lack of an effective debt relief plan is forcing some of the world’s poorest countries to cut public spending to keep payments to their creditors, according to research.
A Debt Justice report says most indebted nations were expected to cut public spending by an average of 3% between 2019 and 2023 despite the need to offset the impact of the spiral of food and food prices. energy.
Using data from the International Monetary Fund for debt and public spending, the campaign group said the disparity between countries with high and low debt highlighted the need for more complete relief. Countries with low debt will increase spending by an average of 14% between 2019 and 2023.
The report comes in line with an investigation this week by the House of Commons Select Committee on International Development into the debt crisis in low-income countries, which is causing concern to both the IMF and the World Bank. Debt Justice, formerly the Jubilee Debt Campaign, said Britain should use its power to get private lenders involved in debt relief.
Tess Woolfenden, the group’s senior policy chief, said: “Low-income countries are forced to prioritize debt payments over public spending on health or access to food, just at a time when spending It’s so urgent. “
In the early stages of the Covid-19 pandemic in 2020, the G20 agreed on a common framework for debt treatment, but no country has yet benefited from the relief through the plan, in part because of the opposition of private lenders.
Noting that 90% of the bonds of countries eligible for the G20 debt relief plan were governed by English law, Woolfenden said: “The UK must act to get private lenders involved in the debt relief “Debt payments to rich lenders should not take precedence over the needs of the people in a time of multiple crises.”
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Debt Justice identifies Sierra Leone as one of the countries forced to divert resources from public spending to debt payments. He says the country’s heavy debt burden was created during the Ebola crisis in 2014 and 2015, but increased as a result of the pandemic. The IMF predicts that real public spending per person in 2023 will be 20% less than in 2015 and 4% less than in 2019. At the same time, this low level of spending is expected to remain at least until 2025, says Debt Justice.
Abu Bakarr Kamara, co-ordinator of the Sierra Leone Budget Advocacy Network, said: “With Ebola and Covid-19, Sierra Leone has faced two major health crises in recent years, which have collapsed. the debt sector and the economy, however, are paying off debt that is vital to recovery.
“Sierra Leone’s debt cancellation is a vital tool to help the government increase its fiscal space to invest in the health sector in a transparent and accountable manner.”