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Africa, Asia, Latin America, Caribbean nations spending more on interest payments than health and education – UN Report

Jan 09, 2024 News

Kaieteur News – The United Nations’ “World Economic Situation and Prospects 2024 Report” reveals that the global economy is expected to grow more slowly in 2024. The growth rate is estimated to drop from 2.7% in 2023 to 2.4% in 2024, which is lower than the 3.0% growth rate seen before the pandemic.

Released on Wednesday, this important report also highlights that many developing countries are facing financial difficulties. It points out that these countries often have high debt and borrowing costs. At the same time, their economic growth is weak, and they are struggling to generate enough financial resources within their own countries.

In fact, the report states that the ongoing rise in interest payments is increasingly diverting resources away from spending on health, education, social protection, and other areas of sustainable development. In 2022, the report states that more than 50 developing economies spent over 10 per cent of total government revenues on interest payments, and 25 countries spent more than 20 per cent.

In Latin America and the Caribbean (excluding Guyana), interest payments increased significantly, representing 25 per cent or more of fiscal revenues in Brazil, Colombia and Costa Rica.

In 2021, the report states that interest payments were equivalent to about 63 per cent of spending on education and 185 per cent of public investment in the region (ECLAC, 2023).

In addition to this, the UN Report states that more frequent and extreme weather events will increasingly strike developing economies, exacerbating fiscal and debt risks in the coming years.

Furthermore, the document states that developing economies are finding it increasingly difficult to invest in climate and development goals while also meeting their debt servicing commitments.

With respect to economic growth in Africa, the report said this is projected to remain weak, increasing from an average of 3.3 per cent in 2023 to 3.5 per cent in 2024. It said the global economic slowdown, tighter monetary and fiscal conditions, and high debt sustainability risks will remain a drag on the region’s growth prospects. “The unfolding climate crisis and extreme weather events will undermine agricultural output and tourism, while geopolitical instability will continue to adversely impact several subregions in Africa, especially the Sahel and North Africa,” the report states.

Turning to Small Island Developing States (SIDS)—a group that includes Suriname, Trinidad and Tobago and Barbados—the report states that the convergence of global crises and shocks has led to an alarming rise in unsustainable debt levels. Kaieteur News understands that external debt in these countries surged to an average of 60 per cent of Gross National Income (GNI) in 2020–2021. The UN document said this is a concerning shift from the 2010–2019 range of 43 to 54 per cent.

The report further notes that the upsurge in foreign debt increases vulnerability and diminishes economic resilience. At present, it said, “More than 40 per cent of SIDS are hovering on the brink of debt distress.” The report said this is a troubling state of affairs as it means these nations will not have enough investments to make in achieving the Sustainable Development Goals (SDGs) which represent are a collection of 17 global goals set by the United Nations in 2015.

Those goals aim to address the world’s most pressing challenges by 2030. These goals encompass a wide range of issues including poverty, hunger, health, education, climate change, gender equality, water, sanitation, energy, urbanization, environment, and social justice.

The SDGs are designed to be universal, inclusive, and interconnected, encouraging nations to work in collaboration towards a more sustainable and equitable world for all.

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