‘Soaring debt levels will harm developing countries soon’ – President Ali warns
President Dr. Irfaan Ali continued his call for more money and better financing options for developing countries at the United Nations (UN) on Wednesday.
Without access to more resources and financing options that help countries manage debt better, the President told a high-level UN forum on financing that the growth of developing countries will be hamstrung.
Already, Dr. Ali said about 60 per cent of the least developed countries globally are in distress or face a high risk of debt distress. And this can prove detrimental.
“Interest rate hikes and soaring debt levels will cost developing countries billions of dollars in the coming years,” Dr. Ali said.
That aside, the President pointed out that countries will have big developmental needs and need all the money they can possibly raise.
For example, he pointed out that countries need to invest about US$1 trillion annually just to move away from using harmful fossil fuels like oil and diesel to more environmentally-friendly energy sources like solar energy and hydropower. However, Dr. Ali noted that close to 900 million people in developing countries have no access to electricity.
The Head of State was also critical of the global financial architecture.
According to him, the global financing system, which allows countries to get loans and other financial aid, is not responsive to the challenges faced by developing countries. So reform, he said, is crucial.
“The financial architecture, which is out of sync with the needs of developing countries, must be reformed.
“In this regard, the early adoption of a Multidimensional Vulnerability Index, implementing the measures in the Bridgetown Initiative and addressing liquidity support, private capital, development lending, trade and more inclusive governance of the International Finance Institutions, must form part of the reform agenda,” Dr. Ali said.