Military escalation could push more than 30 million people into poverty around the world, undoing years of development work, according to a UN analysis.
This makes the creation of the Borrower Platform, an initiative of Member States supported by the United Nations trade agency (UNCTAD), particularly timely.
The problem it aims to address has been years in the making, and the cost of paying off debt has skyrocketed for developing countries over the past decade.
Least developed countries pay almost a quarter of their income to external creditors, and 54 countries, with 3.4 billion inhabitants, now spend more on debt than on health or education. In 2024, the collective external debt burden of developing countries will reach $11.7 trillion.
A ‘breakthrough in global financing’
The Platform, which is open to borrowing countries of all sizes and at different stages of development and indebtedness, will allow them to share knowledge and amplify their collective voice.
It will also strengthen its ability to respond to debt challenges.
On Wednesday, at an event in Washington DC to launch the group, UN Secretary-General António Guterres – whose Debt Expert Group proposed the idea of the Platform in 2025 – described the initiative as a “breakthrough in global financing”, comparable to long-established groups for creditor countries, such as the Paris Club, the London Club and the Institute of International Finance.
Communities in developing countries are particularly vulnerable to rising food prices and supply disruptions. (file photo)
Guterres noted that borrowers have often been excluded from discussions about their own debt levels, They are paying, on average, interest rates that are more than double those faced by advanced economies..
This, he said, “leaves developing countries at a clear disadvantage when it comes to accessing the financing they need, which is Another clear example of the inequality that lurks at the heart of the global financial architecture..”
Increasing pressures
The UN chief referred to the “increasing pressures” caused by the war in the Middle East, which is leading to rising raw material costs, slower growth and strained supply chains, as well as higher fuel prices.
The Platform, he said, will help borrowing countries share expertise on debt restructuring; give them the tools to negotiate with their creditors on equal terms; send a clear market signal to creditors (which could reduce borrowing costs) and put them at the center of future discussions.
“Developing countries are rising economic actors,” Guterres argued, “and global governance must adapt accordingly.”