World’s poorest countries saw the costs of servicing their debt increase by 35 per cent in 2022
At least 21 countries — including Afghanistan, Cameroon, Ethiopia, Haiti, Lebanon, Somalia, Sri Lanka, Sudan and Zimbabwe — were nearing catastrophic levels of both debt distress and rising hunger in 2022, according to a new report. This is even when record-high food prices have receded currently, a year after Russia’s war on Ukraine.
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Global public debt was at its highest levels in almost 60 years and countries were having to choose between repaying debts and feeding people, said the special report by the International Panel of Experts on Sustainable Food Systems (IPES-Food), released on March 6, 2023.
About 60 per cent of low-income countries and 30 per cent of middle-income countries were considered at high risk of (or already in) debt distress.
The world’s poorest countries saw the costs of servicing their debt increase by 35 per cent in 2022, the report titled, Breaking the cycle of unsustainable food systems, hunger, and debt said. Meanwhile, 62 developing countries spent more on debt payments than on healthcare during the first year of the COVID-19 pandemic.
Amid this crisis, by November 2022, 45 countries were in need of external food assistance and some 349 million people in these countries were facing acute food insecurity, with 49 million on the brink of famine.
This pointed out how the food price crisis was entering a dangerous phase — a debt crisis that could plunge millions more into hunger.
Facing structurally higher costs for imports and debt repayments for the foreseeable future, dozens of low-income countries will gradually lose the capacity to address the burgeoning crises they face.
“As debts spiral out of control and the world’s poorest countries struggle to meet the basic needs of their populations, today’s rapidly rising rates of hunger and poverty could soon become a tidal wave, reversing decades of progress, and sparking further instability and conflict,” the authors of the report said.
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In 2022, poorer countries paid 47 per cent of external debt payments to private lenders, 12 per cent to China, 14 per cent to other governments and the remaining 27 per cent to multilateral institutions like the International Monetary Fund.
Meanwhile, countries in sub-Saharan Africa spent an additional $4.8 billion on food imports in 2022 while receiving less food overall.
Africa’s food import dependency has tripled in recent decades, leaving countries exposed to food price spikes like in 2022, “requiring them to earn dollars via export crops to pay down their debts — rather than meeting local food needs”.
The authors noted that unsustainable food systems were a critical factor behind rising debt and hunger.
“Import dependencies, extractive financial flows, boom-bust commodity cycles and climate-vulnerable food systems are combining to destabilise the finances of the world’s poorest countries,” the document added.
Also read: A new pandemic has struck the world: Food inflation
The report called for urgent action to provide debt relief and development finance on a scale to meet the needs of COVID-19 recovery, climate-resilient food systems and sustainable development goals.
It also urged policymakers to repair “historical injustices that have left countries funnelling profits and exports to the global North — through windfall taxes on food profiteers and further steps to achieve tax justice, climate justice and repay ‘ecological’ as well as historical debts.
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