Poor Countries are Calling For a Debt Revolution
Tired of mounting debt and multiple crises, leaders of the world's poorest countries have called for a rewrite of the rules governing the granting of billions of dollars.
According to OECD data, in 2021 Western countries gave out more than 185 billion dollars in the form of grants and cheap loans. Official development assistance is one of the pillars of the international financial system.
But the 46 least developed countries, which are holding their own UN-hosted summit in Doha this week, are feeling the pinch.
Five decades after the creation of the least developed countries club by the United Nations to organize trade privileges and easier access to other financial means, presidents and prime ministers have said that their problems have piled up.
Climate change, the effects of Covid-19, rising food and fuel prices caused by Russia's invasion of Ukraine and mounting debts weigh on poor countries, who blame the system.
"Our partners tend to place all the blame for failures on the recipient partner and avoid examining their own aid programs, which may certainly have contributed to the failures," said East Timor President Jose Ramos-Horta.
Debt blame game
Seychelles President Wavel Ramkalawan has said it is time for international financial institutions to move beyond per capita gross domestic product as the only measure of development.
"One size does not fit all," he said, calling for a system that recognizes that different countries have different problems.
UN Secretary-General Antonio Guterres widened the scope of the attack, condemning the global financial system "created by the rich countries, primarily for their benefit". Without any cash reserves, poor countries are forced to pay "predatory interest rates".
The coronavirus pandemic was regularly mentioned at the summit. The least developed countries received fewer vaccines and then had to borrow at crippling interest rates to pay for their emergency measures.
Before the summit, the United Nations Development Program (UNDP) estimated that 52 countries were in or near debt stress and at risk of bankruptcy.
Lesotho's Deputy Prime Minister Nthomeng Majara was among the leaders who called for an "urgent" debt rescheduling or write-off.
The calls added to long-standing criticism of the World Bank and International Monetary Fund for imposing austerity on the poor to get loans.
China is currently the largest single creditor, often seen as a rival to Western influence, but has recently expressed a willingness to work with the IMF and other institutions to arrange debt relief.
Alongside the official summit, civil society activists held their own meetings to propose radical solutions to the debt problem.
Liddy Nakpil of the Asian People's Movement for Debt and Development, a coalition of several activist groups, said developed countries should simply agree to provide compensation, as they have done in international climate change negotiations.
"We want something that is similar to the climate convention, a recognition of the responsibility that rich nations have for this unsustainable economic system that we have," said Nakpil.
At the 2009 climate conference, major economies pledged $100 billion a year by 2020 to help cover the damage from rising temperatures, but have yet to meet that amount.
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