While the developed world have been cutting interest rates to soften the economic blow of the coronavirus, the Jubilee Debt Campaign report that borrowing costs were rising sharply for poor countries.
Interest rates rose on average by 3.5 percentage points for low- and middle-income countries since the mid-February and that costs for new borrowing stood at 10%.
At the same time, commodity prices have plunged, with the price of copper down by 21% since the start of 2020, oil 61% lower, and coffee falling by 15%. The Bloomberg commodity price index – which measures a basket of oil, metals and food prices – has dropped 27% since the start of the year and is now at its lowest level since 1986.
Countries were also being hurt by a falling number of overseas visitors, with small island states being particularly badly hit because of their size and economic reliance on tourism.
Interest rates rose on average by 3.5 percentage points for low- and middle-income countries since the mid-February and that costs for new borrowing stood at 10%.
At the same time, commodity prices have plunged, with the price of copper down by 21% since the start of 2020, oil 61% lower, and coffee falling by 15%. The Bloomberg commodity price index – which measures a basket of oil, metals and food prices – has dropped 27% since the start of the year and is now at its lowest level since 1986.
Countries were also being hurt by a falling number of overseas visitors, with small island states being particularly badly hit because of their size and economic reliance on tourism.
Tim Jones, policy head at Jubilee Debt Campaign said: “Urgent action is needed to support poorer countries being hit by the economic impacts of coronavirus, including a complete moratorium on debt payments for those most affected. Where economic shocks have pushed countries into debt crisis, the IMF needs to help restructure debt with previous lenders. Otherwise, its loans will just be used to pay off reckless lenders and maintain the debt crises. And the IMF itself needs to cancel debts owed to it by countries suffering the impact of the pandemic.”
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