Prioritise Pandemic Relief, Recovery: No Time for Debt Buybacks

By Anis Chowdhury and Jomo Kwame SundaramSYDNEY and KUALA LUMPUR, Mar 9 2021 (IPS) Developing country governments are being wrongly advised to use their modest fiscal resources to pay down accumulated debt instead of strengthening pandemic relief and recovery. Thus, debt phobia risks deepening and extending COVID-19 recessions by prioritising buybacks. Anis ChowdhuryPandemic debt mounting Nearly half (44%) of low-income countries were already debt-distressed or at high risk even before the COVID-19 pandemic was declared in March 2020. Limited fiscal space has constrained developing countries’ relief and recovery measures, making them far more modest than those of developed countries. Nevertheless, their government debt ratios rose faster in 2020. Many developing countries have taken on more debt, typically on non-concessional terms—from private lenders and non-Paris Club members. Public debt in emerging markets has thus surged to levels not seen in over half a century. In January-October 2020, the average debt burden of developing countries increased by 26% as tax revenues declined sharply. The IMF projects their average debt ratios will rise by 7-10% of GDP in 2021, with some terming this a “debt pandemic”. Debt burdens limit fiscal resources and the policy space needed to better address the pandemic health and economic crises in developing countries. Debt is particularly debilitating in the least developed countries, where healthcare services were modest even bef...
Source: IPS Inter Press Service - Health - Category: International Medicine & Public Health Authors: Tags: Development & Aid Economy & Trade Financial Crisis Global Headlines Health Humanitarian Emergencies TerraViva United Nations Source Type: news