At a high-level meeting of the General Assembly on debt sustainability, António Guterres emphasized the negative impact of debt on developing economies.
He stated that the handling of debt by the international financial architecture has been a failure, and the past four years have been particularly disastrous.
Guterres pointed out that the burden of servicing external debt leaves many countries with limited resources to invest in their own people.
According to UN data, global public debt reached $313 trillion in 2023, with developing economies being the most affected.
In 25 developing countries, over 20% of tax revenue goes towards servicing external debt, and high borrowing costs have resulted in 3.3 billion people worldwide spending more on interest payments than on health or education initiatives.
Guterres stressed that instead of providing a safety net, developing countries are faced with an outdated and unjust system that does not meet their needs.
The debate on debt sustainability and socioeconomic equality for all, convened by the President of the General Assembly, was the first high-level discussion as part of the world body’s Sustainability Week.
The week also included discussions on sustainable transport, tourism, and energy.
Dennis Francis, President of the 78th session of the General Assembly, also addressed the body and highlighted the growing inequalities between richer and poorer nations.
He noted that by 2030, an estimated 600 million people will still be living in poverty, despite the slow progress towards achieving SDG goals.
Francis pointed out that 10% of the world’s population owns 76% of the global wealth, and it will take 229 years to eradicate poverty at the current rate.
He warned that if this situation is not addressed, people in developing countries will be left behind and denied the benefits of development.
Guterres emphasized the need for a lifeline to help developing countries escape the “quicksand of debt.”
He also urged for the implementation of the SDG Stimulus program, which aims to secure $500 billion annually from developed nations to meet the 2030 Agenda for Sustainable Development.
Guterres called for a significant increase in affordable, long-term financing, primarily through Multilateral Development Banks (MDBs).
He also suggested exploring “debt pauses” for vulnerable countries and restructuring their debt with the help of international financial institutions.
Guterres stressed the need for wholesale reform of the global financial architecture, particularly in their approach to debt.
This includes improving debt transparency, increasing lending in local currencies, and developing new debt instruments.
He also emphasized the importance of giving developing countries a seat at the table and involving them in all decisions made about the global financial system.