Crises drive 165 million people into poverty in the last three years: UN

The United Nations has highlighted the devastating impact of recent crises, including the COVID-19 pandemic and rising cost of living, which have pushed 165 million people into poverty since 2020. In response, the UN is calling for a "halt" in the repayment of debts by developing countries to reverse this trend.

Due to the cumulative effects of these shocks, it is projected that the number of people living in extreme poverty (less than $2.15 per day) will reach 75 million between 2020 and the end of 2023. Additionally, an estimated 90 million people will fall below the poverty line of $3.65 per day, according to forecasts by the United Nations Development Program.

Akim Steiner, the head of the program, stated in a press release that "countries that have managed to invest in protective measures over the past three years have prevented many individuals from falling into the clutches of poverty." However, he added, "in heavily indebted countries, there is a link between high levels of debt, insufficient social spending, and alarming poverty rates."

Therefore, the United Nations program is requesting a "halt" in the repayment of debts by these countries that are forced to choose between servicing their debts and assisting their populations.

Another report published by the United Nations on Wednesday reveals that approximately 3.3 billion people, nearly half of the world's population, live in countries where debt servicing costs exceed spending on education or healthcare.

Despite lower levels of debt, developing countries are paying higher interest rates, which are escalating at a faster pace. In light of these circumstances, the United Nations Development Program calls for a "halt" to redirect debt repayments toward financing social measures aimed at mitigating the effects of economic shocks. The organization believes that "the solution is within reach for the multilateral system."

Calculations presented in the report indicate that lifting these 165 million people out of poverty would cost approximately $14 billion annually, which is around 0.009% of the global gross domestic product in 2022 and less than 4% of the debt service of developing countries.

If the lost income of individuals who were primarily living below the poverty line before the recent shocks is taken into account, the cost of alleviating poverty would amount to $107 billion (0.065% of the global GDP and approximately a quarter of the debt service).

Akim Steiner emphasized that "there is a human cost to the failure to restructure sovereign debt in developing countries." He added, "We need new mechanisms to anticipate and absorb shocks and to make the financial system work in favor of the most vulnerable groups."

The United Nations is urging the international community to prioritize addressing the debt crisis and implementing measures that support sustainable development and poverty reduction. By halting debt repayments and redirecting funds toward social initiatives, it aims to create a more equitable and resilient global financial system that can withstand future shocks and promote inclusive growth.




AFP