By Rachel Savage
JOHANNESBURG, Feb 22 (Reuters) - A 30% upfront cut of
debt-stressed countries' borrowings could save them $148 billion
over eight years, the U.N. Development Programme said on
Wednesday, proposing a move to address global debt problems
stirring growing international concern.
A 'haircut' of 30%, or $191 billion, on the 2021 external
debt of the 52 most "debt vulnerable" nations could reduce their
combined debt service bill by $66.4 billion to private
creditors, $44.2 billion to multilateral lenders and $38.9
billion to bilaterals by 2029, the UNDP said in a report.
Improving the loan restructuring process for countries
struggling with their debts is expected to be prominent on the
agenda of the G20 finance minister and central bank meetings
taking place in India in the coming days.
Sri Lanka, Ghana and Ukraine joined the likes of Lebanon and
Zambia in default last year, while Tunisia, Pakistan and Egypt
are among countries that have sought help from the International
Monetary Fund (IMF) amid problems of their own.
"The problem, for many (developing economies), is not an
absence of growth but the fact that tepid growth and high
interest rates in 2023 and 2024 will not provide enough fiscal
or monetary space to mitigate crises," the UNDP report said.
It said that the average country in the 52 it analysed owed
82% of its external public debt to bilateral and multilateral
creditors, such as other countries and the IMF or World Bank.
Meanwhile, 16 owed more than 30% of their foreign debt to
private lenders.
Countries whose international bond interest rates are more
than 10% higher than those on U.S. Treasuries, a premium or
'spread' usually deemed as unaffordable by economists, rose from
five at the end of 2019 to 14 currently, the report found.
Money borrowed from the 'private sector', often in the form
of bonds that countries usually pay higher interest rates on,
accounted for 65% and 45% of external debt in Ghana and Sri
Lanka, respectively.
(Reporting by Rachel Savage, Editing by Marc Jones and William
Maclean)
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