Developing nations’ debt burden may soar to $3.4 trillion, says UNCTAD
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Developing countries’ repayments on their public external debt alone may soar to between US$2.6 trillion and $3.4 trillion in the current and next year respectively.
The United Nations Conference on Trade and Development (UNCTAD) made its updated projection in a trade and development report that was released on Monday.
“The coronavirus pandemic hits developing economies [including Bangladesh] at a time when they had already been struggling with unsustainable debt burdens for many years, as well as with rising health and economic needs,” said the report.
According to the report, developing countries now face a wall of debt service repayments throughout the 2020s.
“In 2020 and 2021 alone, repayments on their public external debt are estimated at nearly $3.4 trillion – between $2.0 trillion and $2.30 trillion in high-income developing countries and between $666 billion and $1.06 trillion in middle- and low-income countries,” it added.
Bangladesh is, however, not too much burdened with external debt and the country never defaulted service debts.
Statistics available with Bangladesh Bank, however, showed that total public external debt of the country stood at $45.51 billion in FY19. The debt increased by $4.74 billion, or 11.65 per cent, in the year over the total accumulated amount of FY18.
Total external debt of the country’s private sector reached $14.24 billion in FY19 recording a meagre 2.0 per cent growth over the previous fiscal year.
Central bank statistics also estimated that the ratio of the country’s total external debt to Gross Domestic Product (GDP) stood at 19.30 per cent in the last fiscal year.
Public debt to GDP ratio was 14.73 per cent in FY19 against the government’s projection of 12.70 per cent.
The UNCTD estimate showed that at the end of 2018, the total debt-stocks of developing countries (external and domestic, private and public) stood at 191 per cent (or almost double) of their combined GDP, the highest level on record.
To overcome the high debt burden, the UN body calls for a global debt deal for the developing world outlining three key steps in this regard.
These are: Automatic temporary standstills, debt relief and restructuring programmes, and establishing an international debt authority for the developing country.