UN Secretary-General Antonio Guterres on Monday called for urgent, bold measures to address an emerging debt crisis caused largely by Covid-19.
“We are on the verge of a debt crisis. Today’s meeting, convened with our partners, the prime ministers of Canada and Jamaica, is a call for urgent action,” he told a high-level event on debt and liquidity, Xinhua news agency reported.
Six countries have already defaulted. One-third of emerging market economies are at high risk of fiscal crisis. And the situation is even worse for least-developed and low-income countries. They face a painfully slow recovery that will put the 2030 Agenda for Sustainable Development and the Paris Agreement completely out of reach, he warned.
Developing countries need access to additional liquidity to respond to the pandemic and to invest in recovery. The international community must urgently provide the necessary support to all developing countries in need, said Guterres.
From the start of the pandemic, the United Nations has advocated for a three-phase approach to debt: a moratorium on debt payments, targeted debt relief, reforms to the international debt architecture, he noted.
He welcomed the steps that have been taken, including fresh financing by international financial institutions, the Debt Service Suspension Initiative of the Group of 20, and the Common Framework for Debt Treatments, but said they are far from enough.
“I am, therefore, calling for much bolder and more ambitious measures.
“We strongly believe that the Debt Service Suspension Initiative must be extended into 2022, and made also available to highly indebted, vulnerable middle-income countries that request it.