Oxfam International has reported that emerging economies, including some of the world’s most impoverished nations, are poised to undergo budget reductions exceeding $220 billion over the next five years due to a looming debt crisis that has pushed numerous countries to the brink of default.
This revelation comes from a recently released Oxfam report, coinciding with the commencement of the IMF-World Bank meetings in Marrakech.
Drawing upon IMF projections, the report also reveals that low- and lower-middle-income nations are projected to grapple with nearly half a billion dollars in daily interest and debt payments until 2029, based on current conditions.
The debt crisis has been exacerbated by a confluence of factors, including escalating global interest rates, surging inflation, and a series of economic shocks triggered by the aftermath of the COVID-19 pandemic, which has severely strained state finances.
Fitch, a leading rating agency, reported that as of March, there have been 14 distinct instances of default across nine sovereign nations since 2020.
In response to this dire situation, Oxfam has called upon the IMF and the World Bank to seize this crisis as an opportunity to establish a more equitable system, rather than solely focusing on debt restructuring and austerity measures.
Amitabh Behar, Interim Executive Director of Oxfam International, emphasized that the proposed solutions currently emphasize austerity measures and increased loans, while potential solutions, such as equitable taxation of the wealthy, remain unexplored.
Oxfam and other humanitarian and advocacy organizations have previously urged international creditors to forgive the debts of developing nations confronting severe economic crises.
The report also underscores a concerning disparity: debt servicing payments in the poorest countries are surpassing healthcare expenditures at a ratio of four to one.
For some nations currently in default, such as Zambia and Ghana, debt restructuring discussions are expected to make headway during in-person meetings in Marrakech.
Simultaneously, the IMF will continue its dialogues with Tunisia, Pakistan, Egypt, and others regarding the terms of proposed bailout loans.
