‘Tepid growth and high interest rates in 2023 and 2024 will not provide enough fiscal or monetary space to mitigate crises,’ says the United Nations Development Programme.
, and Egypt are among countries that have sought help from the International Monetary Fund 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 analyzed 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 US Treasuries, a premium or “spread” usually deemed as unaffordable by economists, rose from 5 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.
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