Developing countries will have to face the suffocating effect of soaring debt, rising interest rates, high food prices and a lack of liquidity, warned a report from the United Nations Conference on Trade and Development (UNCTAD) that UN Mexico released Thursday.
“As the global economy slows and financial turbulence mounts, UNCTAD calls for bold multilateral action to avoid another lost decade for developing countries facing sky-high debt”said UN Mexico on its official Twitter account.
Due to this highly stressful situation for developing countries, the UN trade body called for three key points: “a reform of the world debt architecture and the creation of a multilateral debt renegotiation mechanism; more liquidity for developing countries through the issuance of new special drawing rights worth 650 billion dollars; (and) sound financial frameworks to ensure supervision and better regulate shadow banking institutions”.
The Treasury reported in March that the historical balance of the public sector’s financial requirements amounted to 14 trillion 28 billion pesos, while the net debt of the public sector stood at 14 trillion 58.9 billion pesos. And it estimated an amount of 127 billion pesos, or 0.4 percent of the Gross Domestic Product (GDP) to cover the financial cost of its external debt in 2023.
According to the UN report, the number of countries that spend more on debt than on health and education almost doubled between the periods 2012-2014 and 2019-2021: it rose from nine to 21 nations in terms of education; while the states that allocate more to debt than to healthcare increased from 34 to 62.
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The report stated that much of the world economy will grow below pre-pandemic levels, “with a potentially devastating effect on developing economies”which will exacerbate cost of living problems and inequalities around the world.
The revision of the growth forecast for 2023 in Mexico, according to the report, stands at 0.4%, far from the 1.4% estimated for this year in 2022.
UNCTAD synthesizes its proposal in “a bold international economic agenda to avoid another lost decade for developing countries.” “The time is now,” concludes the video published by UN Mexico.
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