More than 100 countries face cuts to public spending on health, education and social protection as the Covid-19 pandemic compounds already high levels of debt, a new report says. The International Monetary Fund believes that 35 to 40 countries are “debt distressed” – defined as when a country is experiencing difficulties in servicing its debt, such as when there are arrears or debt restructuring.
However, this figure is a “gross underestimation”, according to the study, led by the Pathfinders for Peaceful, Just and Inclusive Societies, based at New York University’s Center on International Cooperation.
Zambia was the first African county to default on debt last year during the pandemic and now has to allocate 44% of its annual government revenue to creditors. Ghana spends about 37% of its national budget on debt interest payments.
In 2019, the cost of servicing external debts in 64 countries exceeded what they spent on healthcare, she said. Cameroon spent 23.8% of its budget on debt payments, compared with 3.9% of the country’s revenue spent on health.
Faiza Shaheen, lead author of the report, explains, “If nothing changes and governments face having to make cuts, populations will see development stall and even reverse. For the person on the street, it means they are going to visibly see that it’s harder to access key services, and they’re not going to see improvements in their material wellbeing.”