Greening international debt data

By Rachid Bouhia, Economist in UNCTAD’s Division for Globalization and Development Strategies

The pandemic has exposed and exacerbated alarming debt levels in developing countries. By the time COVID-19 emerged, public debt in developing countries had increased steadily since 2013, in a context of more recurrent external shocks and rising fragilities in their debt positions, including those related to climate change. By the end of 2019, their total public debt – external and domestic – stood at 59% of combined GDP, the second-highest level on record (Figure 1). On a more positive note, there had also been a notable increase in the diversity and quantity of climate-related financial instruments at the national and regional levels. Information on the nature and scale of these initiatives is today critical to our understanding of – and policy response to – debt statistics.

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irut, Lebanon - August 2020: Beirut Port destroyed following explosive blasts. Photo: Shutterstock

Lebanon’s path back from the brink of collapse

By Dr. Nasser Saidi, Economist and former Minister of Economy and Industry of Lebanon

Since October 2019, Lebanon has been in the throes of a historically unprecedented economic and financial meltdown, simultaneously facing a humanitarian crisis, a debt crisis, a banking crisis, a currency crisis, and a balance of payments crisis. The numbers are staggering. Real GDP has declined for the fourth consecutive year by a cumulative 45% since 2018 making it the second most severe financial crisis in history. The Lira has lost 90% of its value, annual inflation is running at 150% and an 80% de facto haircut has been imposed on deposits.

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It’s time to move beyond a debt moratorium and finance productive capacities in least developed countries

By Paul Akiwumi, Director, Division for Africa, LDCs and Special Programmes, UNCTAD

According to recent UNCTAD analysis, most LDCs will likely take several years to recover the level of GDP per capita they had in 2019, and compared to developed countries, which may experience a short V-shaped recovery, the median LDC would take roughly three years to climb back to pre-COVID-19 levels of output per capita. Moreover, extreme poverty in LDCs is projected to rise to 35%, equivalent to 32 million people, due to the pandemic.

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The debt burden: why ex-post intervention shouldn’t be the default option

By Rodrigo Olivares-Caminal, Professor of Banking and Finance Law at the Centre for Commercial Law Studies, Queen Mary University of London, and Paola Subacchi, Professor of International Economics, Global Policy Institute, Queen Mary University of London

The financial response to the COVID-19 crisis has driven debt building at an unprecedented speed, which has increased the risk of debt distress and the odds of a new debt crisis cycle. Emerging markets and developing economies are most at risk. When the COVID-19 crisis began in February 2020, it demanded extraordinary policy measures to protect lives and provide support to those who had lost their livelihoods. The public debt vulnerabilities for many countries, especially the poorest ones, were already significant at that time, but the subsequent collapse of many economic activities exacerbated the situation. As of 30 April 2021, 29 countries were at high risk of debt distress, and 7 low-income countries had already succumbed to it. Somalia, for example, is currently in debt distress and needs to secure relief to restore debt sustainability.

Emerging markets and developing economies are most at risk because of their exposure to international capital flows and the fact that portions of their debt are issued in hard currencies, namely the US dollar. This leaves them vulnerable to changes in US monetary policy, and so to sudden outflows when risk aversion and international financial volatility are high. Some countries have learned lessons from previous debt crisis cycles – as is evident, for example, in the development of local-currency securities markets which mitigate the risk of foreign-currency borrowing – but such resilience is patchy and far from being systemic.

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Time to accelerate debt relief to finance Africa’s recovery

By Marin Fouéré, Policy Analyst, OECD Development Centre and Daniele Fattibene, Research Fellow at Istituto Affari Internazionali (IAI)

The COVID-19 pandemic continues to take a heavy toll on African economies, home to the fastest growing population in the world. The burden of the crisis adds to the fact that Africa’s per capita real GDP growth over the period 2009-2019 was 1.3% per year, which is half the global average of 2.5%.

Ahead of tomorrow’s Summit on Financing African Economies, gathering African and other world leaders and international organisations, President Emmanuel Macron called for a New Deal for financing Africa’s sustainable recovery through profoundly innovative solutions.

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Significant but insufficient progress in financial support for developing countries

By José Antonio Ocampo, Professor at Columbia University and former UN Under-Secretary-General for Economic and Social Affairs and Finance Minister of Colombia

Recent events and particularly last week’s meeting of the Bretton Woods institutions have generated significant advances in international financial co-operation, particularly in support of developing countries. The latter is crucial, as a large number of low and middle-income countries continue to be severely affected by the COVID-19 crisis while the economic recovery underway is very uneven, as underscored by the IMF in its World Economic Outlook.

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Joe Biden’s chance to renew multilateralism for a green recovery

By Kevin P. Gallagher, Professor and Director of the Global Development Policy Centre at Boston University & Co-chair for the ‘Think 20 Task Force on International Finance’ at the G20 for 2021

This blog is part of a thread looking more specifically at the impacts of the COVID-19 crisis in terms of capital flows and debt in developing countries.

The COVID-19 pandemic triggered the worst economic downturn since the Great Depression. World leaders were quick to convene through the G20 to try and stem the crisis but limited by the dismissal of the process by the United States. Newly elected US President Joseph Biden has just issued a game changing new Executive Order declaring that the United States Treasury shall “develop a strategy for how the voice and vote of the United States can be used in international financial institutions, including the World Bank Group and the International Monetary Fund, to promote financing programmes, economic stimulus packages, and debt relief initiatives that are aligned with and support the goals of the Paris Agreement.”

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La restructuration de la dette en Afrique doit impliquer ses nouveaux créanciers

Par Arthur Minsat, Centre de développement de l’OCDE et Yeo Dossina, Commission de l’Union africaine[i]

Ce blog aborde les impacts de la crise du COVID-19 en matière de flux de capitaux et de dette dans les pays en voie de développement.

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La récession mondiale causée par la pandémie COVID-19 appelle à l’annulation ou à la restructuration de la dette des pays africains. La crise a déclenché un double choc fiscal, avec une hausse des dépenses publiques et une baisse des recettes. Il est essentiel de rétablir la capacité d’emprunt des pays africains pour lutter contre la perte de leur marge de manœuvre budgétaire.

Avant le choc, l’Afrique avait déjà montré des signes de vulnérabilité. Bien que le continent africain se soit illustré par le deuxième taux de croissance économique le plus élevé au monde, avec 4,6 % en moyenne entre 2000 et 2018, sa croissance avait commencé à ralentir, passant d’un pic de 6,8 % en 2012 à 3,2 % en 2019. En 2020, la croissance de l’Afrique devrait se situer entre -2,1 % et -4,9 %, ce qui réduira considérablement la marge de manœuvre budgétaire de tous les pays. Dans l’ensemble, le financement du développement a diminué depuis 2010 en pourcentage par habitant. Tant pour les recettes intérieures que pour les flux financiers extérieurs, le montant du financement par habitant a diminué de 18 % et de 5 % respectivement tout au long de la période 2010-2018. Une économie mondiale moins performante et une croissance démographique toujours élevée dans la plupart des pays africains sont à l’origine de cette tendance à la baisse.

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Ongoing debt restructuring must involve Africa’s new creditors

By Arthur Minsat, OECD Development Centre and Yeo Dossina, African Union Commission[i]

This blog is a part of a thread looking more specifically at the impacts of the COVID-19 crisis in terms of capital flows and debt in developing countries.

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The global recession caused by the COVID-19 pandemic calls for a cancellation or restructuring of African countries’ debt. The crisis has triggered a double fiscal shock of soaring government expenditure and slumping revenues. Restoring African borrowing capacity is essential to fighting a loss of fiscal space.

Prior to the shock, Africa had already shown signs of vulnerability. Although the African continent boasted the world’s second highest economic growth rate at 4.6% on average between 2000 and 2018, it had started to slow down from a peak of 6.8% in 2012 to 3.2% in 2019. In 2020, Africa’s growth is likely to fall between -2.1% and -4.9%, significantly reducing the fiscal space of all countries. Overall, financing for development has dropped since 2010 in per capita terms. For both domestic revenues and external financial inflows, the amount of financing per capita has decreased by 18% and 5% respectively throughout 2010-2018. A less favourable global economy and persistently high demographic growth in most African countries have driven this downward trend.

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The Future of Financing for Development

By Mahmoud Mohieldin, United Nations Special Envoy for the 2030 Agenda, and Benjamin Singer, Economic Affairs Officer, United Nations

This blog is also a part of a thread looking more specifically at the impacts of the COVID-19 crisis in terms of capital flows and debt in developing countries


Before the pandemic started, developing countries had been increasing their debt levels since the 2000s. By the end of 2019, 44% of IDA-eligible countries were already considered at high risk of or in debt distress. Debt servicing costs of least developed countries (LDCs) and low-income countries increased twofold from 2000 to 2019 to reach 13% of government revenue. A growing proportion of this debt was privately owned, or commercial.

Then the pandemic hit, sending countless public health systems, many already under pressure, into disarray. Up to 1.6 billion livelihoods – half the world’s workforce – have been lost. Health and unemployment benefit expenditures skyrocketed at the same time as the release of some US$9 trillion worth of stimulus packages.

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