At a record high the expenditure of poor countries to service the debt

2023-04-15 22:54:00

Sri Lanka faces the greatest difficulty servicing its debt, with repayments accounting for 75% of annual government revenue. Its bankruptcy is considered certain. Photo EPA

Poor countries will have this year higher costs to service the debt of the last 25 years, which will force them to cut spending on health and education.

The repayments debt due to non-residents for a group of 91 of the poorer countries of the world will account for an average of more than 16% of government revenue in 2023, rising to almost 17% the following year, according to a study by Debt Justice.

The increase in servicing costs will fuel an ongoing debate about debt relief.

Lenders and foreign governments under his leadership IMF and her World Bank they provided extensive debt relief at the turn of the millennium.

The Heavily Indebted Poor Countries Initiative eliminated most of the bilateral and multilateral external public debt for many of them.

They will be forced to cut funds for health and education.

Heidi Chow, executive director of Debt Justice, said debt repayments today are once again reaching “crisis” levels for many governments, “impeding their ability to deliver public services, combat climate crisis and to respond to economic turmoil.”

The average hit a low of 6.6% of revenue in 2011 and has been rising ever since.

Chow called for “rapid and comprehensive” relief of public debts, including changes to the laws governing government bonds in England and New York state, to force private creditors to participate in the debt write-off.

But Masood Ahmed, president of the Washington-based think tank Center for Global Development and a former senior official at the IMF and World Bank, said today’s problems cannot be dealt with in the same way as in the past. “Now things are different,” he said. “Most countries want to maintain their access to external borrowing.”

According to World Bank data analyzed by Debt Justice, Sri Lanka faces the greatest difficulty in servicing its debt, with repayments accounting for 75% of annual government revenue. Its bankruptcy is considered certain.

Pakistan, which is also at high risk of default, has scheduled public debt repayments equal to 47% of government revenue this year.