UPDATE: UN Secretary-General Antonio Guterres has issued a stark warning that the global debt crisis poses a significant threat to the international trade system. Speaking at the 16th UN Conference on Trade and Development (UNCTAD) in Geneva earlier today, Guterres emphasized that escalating debt levels are forcing countries to divert funds from critical areas like health and education.
Guterres lamented that too many nations are ensnared in a vicious cycle of debt, where they spend more on servicing creditors than on essential services. “Global debt has soared. Poverty and hunger are still with us. The international financial architecture is not providing an adequate safety net for developing countries,” he stated. This urgent call to action highlights the precarious position of developing nations as they face rising tariffs and significant financial insecurity.
The UN chief pointed out that three-quarters of global growth now originates from developing countries, yet geopolitical divisions and climate crises are limiting their potential. He noted the troubling rise of trade barriers, with some least-developed countries facing tariffs as high as 40 percent, despite contributing only one percent to global trade flows.
Guterres underscored the detrimental effects of protectionism, stating that while it might be “inevitable” in some scenarios, it should at least be rational. He warned that investment is retreating and supply chains are in turmoil, creating an unstable environment for economic growth.
To combat this crisis, Guterres announced the establishment of the Sevilla Forum on Debt, designed to address the entrenched financial struggles of developing nations. This forum aims to lower borrowing costs, accelerate support for countries in debt distress, and unlock financing to enhance domestic funding capabilities. “Some states are being crushed by debt,” he stressed, calling for immediate international action.
According to UNCTAD, global public debt soared to $102 trillion last year, with developing countries accounting for $31 trillion of this debt and collectively paying $921 billion in interest. The organization revealed that 3.4 billion people live in countries where more is spent on debt servicing than on health or education.
Rebeca Grynspan, chief of UNCTAD, described the situation as a “slow erosion of development,” warning that current measures reflect “perpetual crisis management dressed up as normality.” She emphasized the need for a framework where “debt serves development instead of consuming it,” urging a shift towards sustainable solutions.
As the global community grapples with this escalating crisis, Guterres outlined four key priorities for international action: establishing a fair global trade and investment system, providing financial support to developing countries, fostering technology and innovation, and aligning trade policies with climate objectives.
The first meeting of the Sevilla Forum is expected to take place in 2024, but immediate measures are required to prevent further deterioration of the global trade landscape. The urgency of the situation cannot be overstated, as Guterres calls for coordinated efforts to ensure that the rules-based trading system is not derailed.
In light of these developments, the international community must act swiftly to avert further economic instability and ensure that developing nations are not left behind as global economic dynamics evolve. Share this urgent news to spread awareness of the looming debt crisis and its implications for global trade.
