UN chief calls for more pandemic debt relief for poorer nations

UN Secretary-General Antonio Guterres said the global community must "urgently provide" support to poorer nations
UN Secretary-General Antonio Guterres said the global community must "urgently provide" support to poorer nations Michael Sohn POOL/AFP/File
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United Nations (United States) (AFP)

UN Secretary-General Antonio Guterres called Monday for greater debt relief and new creative financing to help poorer nations deal with the pandemic and prevent their economic recoveries from falling behind.

A "new debt mechanism" to provide more options -- including debt swaps, buy-backs and cancellations -- is needed, he said, as many nations have been reluctant to add debt during the global health crisis, fearing a hit to their credit ratings.

He also called on G20 nations to extend the suspension of debtors' loan payments into 2022, and expand the Common Framework for Debt Treatments to include middle-income countries that request it.

"We are on the verge of a debt crisis," Guterres said at the start of a high-level meeting with dozens of heads of state, calling for "urgent action."

Richer nations, he said, have spent an unprecedented $16 trillion on emergency health and economic measures, "preventing a downward spiral, and setting the stage for recovery."

"But many developing countries cannot invest in recovery and resilience, because of financing constraints," he said, noting that the world's least developed countries have spent 580 times less per capita terms on their Covid-19 response than advanced economies.

Guterres cited stark differences in vaccine rollouts in rich and poor nations, and the poorest facing "painfully slow" economic recoveries that risk becoming a drag on the global economy.

Six nations have already defaulted on loans, and one-third of emerging market economies are at "high risk of fiscal crisis," he said.

"Developing countries need access to additional liquidity to respond to the pandemic, and to invest in recovery," Guterres said.

"The global community must urgently provide the necessary support to all developing countries in need."