“We face the spectre of a divided world and a lost decade for development,” United Nations Secretary-General António Guterres said.
The inability of developing nations to spend on post COVID-19 recovery and resilience has placed the world on the “the verge of a debt crisis”. He said that developing nations needed access to liquidity to allow them to sufficiently respond to the pandemic and invest in recovery.
128 million people have fallen into extreme poverty over the last year.
While the world’s rich nations have benefited from an unprecedented $18 trillion of emergency support measures, setting the stage for economic recovery post COVID-19, many developing nations could not invest in recovery and resilience. In fact many have spent 580 times less per capita on their COVID-19 response, in comparison to richer nations, because they do not have the money to do so. One third of emerging market economies where at high risk for fiscal crisis while six countries had already defaulted on loan payments. Guterres said the situation was even worse for least-developed and low-income countries.
"...that will put the 2030 Agenda for Sustainable Development and the Paris Agreement completely out of reach,” Guterres warned.
The stark reality of lack of funding among developing nations was clearly evident in the access to COVID-19 vaccines.
“Many developed countries are on the brink of mass vaccination drives. In developing countries this could take months, if not years, further delaying a global recovery,” Guterres said.
Jamaican Prime Minister Holness said, “an uneven and inequitable vaccination programme will lead to an uneven global recovery and sadly a re-inforcement of poverty”.
Director-General of the World Trade Organisation (WTO) Ngozi Okonjo-Iweala said COVID-19 has worsened debt dynamics for many developing countries.
As well as restrictions on export opportunities and lowering commodity prices, “The collapse of export receipts from tourism has prompted balance of payment difficulties for many developing countries, especially island economies from the Caribbean to the Pacific to the India Ocean,” Okonjo-Iweala said.
Finance for trading dried up for ‘several’ low-income nations as foreign banks cut existing credit lines or refused to endorse letters of credit unless guaranteed by others.
“Without trade finance countries cannot import the basic necessities, they can only do it by paying cash in advance,” she said.
Kristalina Georgieva, managing director of the International Monetary Fund (IMF), admitted that “prospects for recovery are dangerously diverging”.
President of the World Bank Group David Malpass said the world faced devastating challenges, especially for the poorest countries.
“For countries with unsustainable debt we are looking for solutions that meet both the near-term liquidity challenges and the longer-term sustainability challenges,” Malpass said, explaining that solutions for both time frames was critical in helping people get access to resources for health, education and climate.
President of the African Development Bank (AfDB) Akinwumi A. Adesina said the COVID-19 pandemic “has devastated Africa’s accounts”
“We need global solidarity on vaccine access for Africa. We also need global solidarity on debt for Africa,” Adesina said.
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