Distinguished members of the press, ladies and gentlemen,
The regional stories on debt situation and challenges prepared by the United Nations Regional Commissions provide further insights into how the world is struggling with rising public indebtedness while pursuing inclusive and sustainable development.
Across all developing regions of the world, we see that public debt has been on the rise. Yet, the difference in the magnitude is notable.
Between 2010 and 2022, the amount of general government debts increased by about four times in Asia and the Pacific, three times in Africa, and 2.5 times in Europe and Central Asia. In Latin America and the Caribbean, the increase is smaller at about 1.6 times.
On the composition of debt, external public debt still accounts for half of the total public debt stocks in all developing regions. This makes developing countries highly vulnerable to economic shocks, which is what we all witnessed during the recent food, energy and financial crises.
Another key development is the changing creditor landscape. Private creditors have now become the largest creditor group in all developing regions. In Latin America and the Caribbean, about three quarters of external public and publicly guaranteed debt are owed to private creditors.
Along with rising government debt levels, the interest payment burden is adding more pressure. In the past decade, the number of developing countries paying over 10 per cent of their government revenues on interest increased in all regions. In 2022, this was the case in at least 21 African countries.
Higher interest payments mean that less resources are available for people.
- In all developing regions, net interest payments on public debt grew faster than public spending on education, healthcare and developmental investments.
- In Africa, the continent spent more on interest payments than on education or health spending.
- In Europe and Central Asia, government spending on education and public investments have dropped by at least 20 per cent while interest payments increased by 80 per cent.
- Half of the population in Africa, Asia and the Pacific, and Latin America and the Caribbean are living in countries where government spending on education or health is lower than net interest payments.
Beyond the amount of debt itself, the large interest payment burden is driven by the high cost of sovereign borrowing.
In Africa, the yield of their international sovereign bonds is almost nine percentage points higher than the US benchmark rate. In Latin America and the Caribbean, this figure is close to 5 percentage points. Most striking, countries such as Argentina, Pakistan and Tunisia have to pay 1 dollar of interest for every 4 dollars they borrow every year.
All these numbers underscore the need to make cheaper, longer-term financing available for developing countries worldwide. The SDG Stimulus already calls for bold actions by the international community.
All the five United Nations Regional Commissions will work to address public debt challenges to effectively pursue the Sustainable Development Goals. Closing revenue gaps, improving spending efficiency and effectiveness, and better management of public debt remain key to reduce debt distress. Together with other development partners, we will also work to promote common international debt resolution mechanisms and restructuring frameworks.
Thank you very much