UN Agency: Escalating Debt Challenges Inhibiting SDGs’ Attainment

Ndubuisi Francis in Abuja

Soaring debt levels in developing countries,  including Nigeria are holding back progress on many Sustainable Development Goals (SDGs) targets,  the United Nations Conference on Trade and Development (UNCTAD) has revealed.

The  costs of repaying debts are the highest for low-income countries. In 2022, they spent about 19.3 per cent of government revenues to service their debts – four times higher than in 2012, the UN intergovernmental organisation which promotes the interests of developing countries in world trade said in the latest annual SDG Pulse, a global reference for tracking progress towards achieving the  UN 2030  Agenda for Sustainable Development.

 The report stated that mounting public debt posed a significant obstacle to development and achieving the SDGs adding that it undermines governments’ ability to invest in basic services, such as health care and education.

It observed that an increasing number of developing countries were on the brink or already in debt distress as they faced cascading and overlapping crises, including the devastating impact of COVID-19 pandemic, the war in Ukraine, a deepening climate crisis, and a cost-of-living crisis.

This was in addition to the daunting global macroeconomic environment including higher interest rates and banking stress in developed countries, tightening global financial conditions, US dollar appreciation, growth slowdown and falling commodity prices, have also taken their toll.

The SDG Pulse noted that about one in three countries worldwide faces a high risk of a fiscal crisis, with developing countries bearing the heaviest debt burden.
The total external debt for these countries was 15 per cent higher in 2022 than in 2019, before the COVID-19 pandemic hit, it said.

During the past decade, their external debt stocks have more than doubled to an alarming $11.4 trillion, the report stated, adding that debt overhang had continued to become an obstacle to development and the attainment of SDGs.

Despite multilateral efforts, the debt problem in low-income as well as many middle-income developing countries, three years after the COVID-19 pandemic, continues to deepen, it explained.

“External creditors continue to be paid while the SDGs are increasingly out of reach. This jeopardises the delivery of existing international commitments, including the 2030 Agenda and the Paris Climate Agreement.

“Keeping debt default at bay to prevent a systemic debt crisis has come at a cost, with debt servicing draining resources away from SDG priorities and the Paris Climate Agreement.

“The high increase evidenced by debt statistics indicate that we are living in a development crisis.

“An ambitious and comprehensive multilateral response is paramount to avoiding a possible systemic debt crisis which would deepen the existing development crisis,” the report noted
To achieve the SDGs, a radically different multilateral policy approach is needed, requiring a commitment by the international community to transform the global financial system by prioritising the needs of developing countries, as advanced by the UNCTAD Bridgetown, it stressed.

Commenting, Anu Peltola, who leads UNCTAD’s statistics work said: “We’ve reached the halfway mark of the 2030 Agenda, and multiple global crises are battering our economies, societies and the planet.

“It’s more important than ever for policymakers to have timely and reliable data and analysis to guide their decisions.”