Debt justice: Unprecedented debt crisis unfolding in developing countries
The world is currently facing unprecedented levels of global public debt, which reached a new global high of $92 trillion. 136 out of 152 countries in the Global South face a critical debt situation, highlighting the magnitude of the current crisis.
3.3 billion people live in countries where governments are spending more on servicing their debt than on their population’s rights to health and education. This can be felt most strongly in Africa, where public money paid to creditors corresponds to 2.5 times education spending, 4 times health spending, and 11 times social protection spending. According to the A World of Debt Report, countries in Africa borrow on average at rates that are four times higher than those of the United States and even eight times higher than those of Germany, which reinforces a vicious cycle.
Since such a structural problem requires structural solutions, a growing number of voices in the international development community agree on a need for a more effective, representative and fairer international system for dealing with sovereign debt. This includes moving towards a multilateral legal framework for debt restructuring that guarantees participation of all public and private creditors; and debt relief packages that allow for the revival of economic activity and the progressive realization of human rights. A reformed international debt mechanism, complemented by an inclusive and representative sovereign debt authority, would lead to a more fair and effective resolution of debt crises, grounded in human rights norms and standards.
“We must address debt distress. This means tackling the high cost of debt and it means a more effective process for restructuring unsustainable sovereign debt, taking into account state’s international human rights obligations.” Dr. Volker Türk, United Nations High Commissioner for Human Rights, UN Human Rights Office (OHCHR)
“It’s urgent because we are really looking at phenomenal figures[…] Debt servicing is eroding money funding[…] The fight for poverty for the first time in a very long period is actually going backward.” Marcella Favretto, Chief of the Sustainable Development Section, Office of the High Commissioner for Human Rights.
“The issue of debt is absolutely crucial. What we want to see happen is a different conversation, a multilateral, multicountry initiative that will really look at how we make sustainable progress on debt relief. Now is the moment. It’s absolutely urgent.” Peggy Hicks, Director of Thematic Engagement, Special Procedures and Right to Development Division, Office of the High Commissioner for Human Rights
“The development crisis is unfolding because countries are managing to service debt, but at what cost? Low-income countries and middle-income countries are paying five or three times more than was considered a maximum in 1953 in the London Agreement. This is a real crisis.” Dr. Penelope Hawkins, Acting Head of the Debt and Development Finance Branch, UNCTAD
“The world is now facing multiple crises. Most developing countries are highly in debt. They don’t have the money to deal with or to address the climate emergency in which we’re in. They don’t have the resources to help people that are living in poverty in their countries.” Magdalena Sepúlveda Carmona. Executive Director of Global Initiative for Economic, Social and Cultural Rights, UNRISD
“The challenges start to come about when we come into what is being called the debt cycle, which is a country continually putting itself in that position to take on debt again and again and sometimes using debt to pay off previous debt. This is the toxic cycle that we have to really be worried about in human rights spaces.” Dr. Attiya Waris, Independent Expert on Debt and Human Rights, United Nations Human Rights Council
“There is a [debt] risk assessment that is outdated. It’s modeled on the business model of ever-increasing expansion of profit rather than improving the well-being of people. Something needs to be done in that respect immediately.” Dr. Solomon Ayele Dersso, Commissioner, African Commission on Human and Peoples’ Rights
Sources
A world of debt: A growing burden to global prosperity (2023), UNCTAD
“A World of Debt” Dashboard, UNCTAD
Trade and Development Report (2023), UNCTAD
The Least Developed Countries Report (2023), UNCTAD
THE WORST EVER GLOBAL DEBT CRISIS: NEW DATA FROM DEBT SERVICE WATCH (2023), Development Finance International
2023 GLOBAL SOVEREIGN DEBT MONITOR (2023), erlassjahr.de and misereor
DECODING DEBT INJUSTICE: A guide to collecting, analyzing, and presenting data, to shed new light on how the global debt crisis impacts people’s rights. (2023), Center for Economic and Social Rights
Southern Debt Report: Characteristics and Challenges (2023), Latindadd and Afrodad
