Oxfam warns poorest countries face $220B budget cuts in 5 years due to mounting debt crisis.
Oxfam International’s latest report cautions that the world’s poorest countries are teetering on the edge of substantial budget reductions, totaling more than $220 billion over the next five years, owing to an escalating debt crisis.
As the IMF and World Bank meetings commences in Marrakech, the report, based on IMF data, emphasises that low- and lower-middle-income nations will grapple with nearly $500 million in daily debt servicing payments until 2029. The poorest countries are allocating four times more to repay debts to wealthy creditors than to their healthcare systems.
According to inputs from Reuters, the crisis has been exacerbated by a confluence of factors, including rising global interest rates, surging inflation, and a series of economic shocks stemming from the COVID-19 pandemic.
Oxfam’s call to action urges the IMF and the World Bank to go beyond traditional responses of debt restructuring and austerity measures. Instead, the organisation implores them to leverage this crisis as an opportunity to create a more equitable global financial system. Oxfam International’s interim Executive Director, Amitabh Behar, criticized the prevailing approach, stating that it relies on “more austerity” and “more loans,” while neglecting solutions such as taxing the wealthy.
Oxfam and various aid and advocacy groups have a notable reputation of consistently advocating for international creditors to cancel the debts of developing nations grappling with economic crisis. With inputs from this Oxfam Press release, states that, “The World Bank says we are likely seeing the biggest increase in global inequality and poverty since World War 2, yet the Bank has no clear goal to reduce inequality.“
In Marrakech, progress is anticipated in tackling the debt crisis, with negotiations for debt restructuring in defaulting nations like Zambia and Ghana. Concurrently, the IMF will engage in ongoing talks with Tunisia, Pakistan, Egypt, and various other countries to define the terms of potential bailout loans.
As this debt crisis unfolds, there is an urgent need for a more comprehensive and equitable approach to address the financial challenges faced by some of the world’s most vulnerable nations.
