Debt Of Developing Countries Can Increase To $2.6-3.4 Trillion Amid Coronavirus Crisis
Developing countries payment of government loans taken from abroad due to the new Coronavirus epidemic may increase to $ 2.6-3.4 trillion in 2020 and 2021. The UN Conference on Trade and Development (UNCTAD), a United Nations agency, said this in a new report. UNCTAD said that due to health and economic needs, developing countries were already struggling with huge debt. The coronavirus has aggravated this situation.
Developing countries themselves need resources to deal with the epidemic
The UNCTAD report states that high-income developing countries will have to pay up to $ 2–23 trillion against external government debt. Whereas middle and low income developing countries have to pay from $ 666 billion to $ 1.06 trillion. UNCTAD Secretary General Mukhisa Kituyi said that at this time developing countries need resources to deal with the epidemic. Therefore, there should be a global agreement on debt relief for developing countries and they should be given debt relief.
Due to large scale outflow of foreign capital, it became more difficult for developing countries to repay debt.
Last month, UNCTAD appealed to the global community to issue a $ 2.5 trillion coronavirus crisis package for developing countries. The report said that even before the virus crisis, the governments of these countries were spending a large part of their revenue to pay debts. Due to this, they were running low on health and social welfare programs. Foreign portfolio investors (FPIs) have largely withdrawn capital from these countries due to the epidemic. Due to this, it has become more difficult for these countries to pay debts.
The IMF and the G20 group currently exempt the poorest countries from repaying debt.
Earlier this month, the International Monetary Fund (IMF) exempted the 25 poorest countries from paying their debts for six months. With this, these countries currently have about $ 215 million left. The G20 group has also exempted the 73 poorest countries from paying their debt from May to the end of this year.
