Pakistan among 54 countries need big ‘immediate debt relief’: UN

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Pakistan among 54 countries need big ‘immediate debt relief’: UN

In a chorus of organisations and charities warning that a significant debt crisis is now engulfing the world’s poorest nations, the United Nations Development Programme (UNDP) added its voice on Tuesday.

In a recent assessment, the UNDP calculated that 54 nations, home to more than half of the world’s poor, now need rapid debt relief in order to prevent more severe poverty and give their populations a chance to combat climate change.

A significant debt problem is forming throughout developing nations, and there is a good chance that things will become worse, according to a research released on Tuesday.

The warning comes as the World Bank (WB) and International Monetary Fund (IMF) convene in Washington this week amid growing concerns about a worldwide recession and a wave of debt problems ranging from Sri Lanka and Pakistan to Chad, Ethiopia, and Zambia.

Read Pakistan won’t contact Paris Club to reschedule its debt, according to Dar

The UNDP administrator, Achim Steiner, called for a range of actions, including the cancellation of debt, extending debt relief to a larger number of nations, and even introducing special bond contract language to provide for wiggle room in times of crisis.

Before they become at least less manageable and maybe uncontrollable, he told reporters, “it is vital for us to step up and find solutions to deal with these difficulties.”

Without meaningful debt relief, poverty will increase and crucial investments in climate change adaptation and mitigation will not be made.

The UNDP study also advocated for a recalibrating of the Common Framework, an initiative spearheaded by the G20 that aims to aid debt-ridden nations affected by the COVID-19 epidemic. So yet, only Chad, Ethiopia, and Zambia have employed it.

It suggested extending the Common Framework’s eligibility to include all deeply indebted nations rather than just the roughly 70 least developed nations. It also suggested that any debt payments be automatically halted during the process.

Both of these “will function as an incentive for creditors to engage and to maintain a fair timeframe, and it may also eliminate some of the reticence induced by rating anxieties for debtor nations,” according to the research.

Additionally, it suggested that governments pledge to take green actions to entice creditors to write down their debt and that creditors should be legally required to engage “in good faith” in a Common Framework restructuring.

According to the article, “it makes a lot of sense.” These nations not only made the fewest contributions to climate change, but they also paid the largest price for it.