While wealthy nations were able to support their pandemic recovery with record amounts borrowed at ultra-low interest rates, the poorest nations have spent billions of dollars paying off their debt, thereby preventing them from investing. invest in sustainable development.
COVID-19 push an additional 77 million people into extreme poverty by 2021, while many economies remain below pre-2019 levels, according toSponsoring the Sustainability Report: Bridging the Financial Divide.
‘There is no excuse for inaction’
Furthermore, it is estimated that one in five developing countries will not see their Gross Domestic Product (GDP) return to 2019 levels by the end of next year, even before absorbing the effects of the conflict. conflict in Ukraine, which is affecting food, energy, and finance globally.
The report was produced by the United Nations Department of Economic and Social Affairs (DESA) together with more than 60 international agencies, including within the UN system and international financial institutions.
UN Under-Secretary-General Amina Mohammed described the findings as “alarming”, noting that the world was halfway to funding the Sustainable development goals (SDGs).
“There is no reason not to act at this time of defining collective responsibility, to ensure hundreds of millions of people are lifted out of hunger and poverty. We must invest in access to good and green jobs, social protection, healthcare and education leaving no one behind.” she speaks.
New challenges ahead
The report revealed that on average, the poorest developing countries pay about 14% of their revenues to pay interest on their debt, while this figure is 3.5% for richer countries.
The pandemic forced governments to cut funding for education, infrastructure and other capital expenditures. The consequences of the war in Ukraine – such as higher energy and commodity prices, as well as new supply chain disruptions – will only exacerbate these challenges and create new ones.
War also has the potential to lead to more debt and increased hunger, further widening the “pandemic recovery gap” that existed before conflict.
Build on progress
Liu Zhenmin, head of DESA, pointed to a silvery potential for the way forward.
“The developed world has demonstrated over the past two years that millions of people can be lifted out of poverty with the right investments – in clean and sustainable infrastructure, social protection or services,” he said. public service”.
“The international community must build on that progress and ensure that developing countries can invest at similar rates, while reducing inequality and ensuring a sustainable energy transition.”
The past year has also been marked by some progress in poverty reduction, social protection and investment in sustainable development, spurred on by actions in developing and some developing countries. major developments, including about $17 trillion in COVID-19 emergency spending.
Besides,Official Development Assistance (ODA) hits $161.2 billion in 2020, the highest level ever.
However, 13 governments also cut this support to developing countries, andThe record amount is still not enough to meet the huge demand.
The UN is concerned that increased spending on refugees in Europe, another consequence of the war in Ukraine, could lead to cuts in aid to the world’s poorest countries.
Bridging financial division
The report urges countries to urgently address growing financial shortfalls and debt risks.
This could happen through a number of measures, such as speeding up debt forgiveness and expanding eligibility for highly indebted middle-income countries.
“It would be a tragedy if donors increased military spending at the expense of Official Development Assistance and climate action. And it would be a tragedy if developing countries continued to default, at the expense of investments in social services and climate resilience.”speak Miss Mohammed.
Financial flows must also be aligned with sustainable development and climate action. with an international tax system that allows for fair tax administration, trade and investment policy actions to combat vaccine inequality and improve access to health products.
Increased transparency will strengthen countries’ ability to manage risks and make good use of their resources. Measures here could include addressing illicit financial flows through improving the sharing and use of tax information, as well as enhancing the transparency of debt data.
