Bridging the finance divide crucial to development goals, says senior UN official

 

Source: Xinhua  Editor: huaxia  2022-04-23 09:54:28

 

A finance divide between rich and poor countries sharply curtails the latter's ability to recover from the COVID-19 pandemic and respond to further shocks, said Liu Zhenmin, UN Under-Secretary-General for Economic and Social Affairs.

 

The world economy has withstood a barrage of shocks in the last two years, Liu noted in a recent interview with Xinhua, saying the economic outlook, along with the prospects of eradicating poverty and achieving the Sustainable Development Goals, remains highly uncertain.

 

"However, these shocks do not impact all countries and peoples in the same way," the senior UN official said.

 

In crisis situations, access to financing and the terms of such access in part determine how well countries can respond and recover, Liu stressed.

 

Faced with the devastating consequences of the pandemic, developed countries have been able to borrow record sums at ultra-low or even negative interest rates to support their economies and invest in recovery. Poor countries, on the other hand, have been unable to respond on a similar scale, according to the official.

 

"They (poor countries) have been hamstrung by severe fiscal constraints. Despite international support, many could only make necessary health expenditure to fight COVID-19 by cutting spending in areas such as education and infrastructure," he said.

 

"Globally, three in five of the poorest countries are at high risk or already in debt distress. High risk translates into ever higher borrowing costs," he added.

 

Meanwhile, the official warned that the prospects countries face will likely diverge further as the conflict in Ukraine dampens growth prospects and heightens inflationary pressure.

 

"Economic consequences of the conflict in Ukraine are exacerbating the challenges faced by the poorest countries." The interest costs developing countries pay on their commercial borrowing has increased further amidst heightened uncertainty in financial markets, and rising commodity prices are putting additional pressures on oil and food importing countries, he said.

 

"Alarmingly, the fight against poverty and inequality could be set back for an entire generation," he said, stressing that developing countries, more than ever, will need support from the international community to weather these storms.

 

Liu said that the United Nations, in its 2022 Financing for Sustainable Development Report, has proposed four crucial areas of action to provide developing countries with access to financing on terms they need, including recommendations to improve the borrowing terms that they face in international financial markets.

 

The measures also include providing developing countries with international public financing at concessional terms and avoiding protracted crises by resolving unsustainable debt situations urgently and speedily, according to the report.

 

"We know what to do to prevent a reversal of progress for sustainable development; together, we must find the will to take action," Liu said.