UNDP warns of triple blow to developing countries — The Guardian
The United Nations Development Programme (UNDP) has warned that developing countries are facing simultaneous pressure from the energy crisis, the El Niño climate phenomenon and rapidly rising costs of government borrowing. Ahead of the annual meetings of the IMF and the World Bank in Bangkok, Thailand, UNDP chief Alexander De Croo called on the international community for solidarity and coordinated action.
Risk of renewed rise in poverty
As The Guardian reports, the UNDP report No Time to Recover addresses the combination of energy, climate and debt crises. Oil prices have again exceeded $100 per barrel in recent weeks after the resumption of hostilities in the Middle East.
According to the UNDP, after the war in Iran began at the start of the year, emergency government measures partly shielded up to 130 million of the world's poorest people from the full impact of high prices. At the same time, state resources to further contain price increases are being exhausted, so an increasing number of governments are being forced to allow higher prices to affect the population.
De Croo said that the combination of these factors could push tens or even hundreds of millions of people back into poverty. According to him, the situation could worsen by spring, as there is currently no sign of improvement in either fuel prices, El Niño or the bond market.
More current news is available on the UA.News Telegram channel Telegram.
Expensive loans and spending cuts
The report also states that the strongest El Niño event in possibly a thousand years could cause widespread crop failures and increase the risk of extreme weather events. At the same time, a global bond sell-off is raising financing costs for governments in developing countries. De Croo noted that the cost of bond financing for such states now stands at about 9%.
A separate study by the Debt Justice organization showed that low-income countries which the IMF classifies as being in debt distress or at risk of it have cut education budgets by an average of 8% since 2019. Their broader public spending has fallen by 2%.
The UNDP called on multilateral lenders, donors and partners to expand access to affordable financing so that countries can continue supporting the most vulnerable households. De Croo also recalled the temporary suspension of debt payments for developing countries that G20 states introduced during the Covid-19 pandemic and pointed to the importance of measures to ensure liquidity.
