As if dealing with COVID-19, conflicts, and climate change wasn't enough, emerging nations are now suffocating under a colossal $29 trillion in public debt.
According to a new UN report, the debt crisis is so bad that "15 countries are spending more on interest payments than they do on education" and "46 spend more on debt payments than they do on health care."
As the NY Times' Patricia Cohen reports, "Unmanageable debts have been a recurring feature of the modern global economy, but the current wave may well be the worst so far. Overall, government debt worldwide is four times what it was in 2000."
Who is cashing in on poor countries debts? According to the Times: old school development banks and major Western banks, shady private lenders, official creditors like China, "as well as a variety of sometimes secret loan agreements governed by different national regulations."
These lenders rake in extra money with usurious surcharges, too:
Martin Guzmán, a former finance minister of Argentina who also experienced the devastating impact of his native country's debt crisis, was at the Vatican meeting last week. In his view, I.M.F. help is sometimes counterproductive, offering bailout loans, now with high interest rates, that end up increasing a country's already burdensome debtHe has also railed against the extra fees, or surcharges, that the fund imposes on struggling high-risk debtors, siphoning precious funds that could be used to provide health care and rebuild an economy.
The five largest borrowers — Ukraine, Egypt, Argentina, Ecuador and Pakistan — paid $2 billion alone in surcharges last year, according to the Center for Economic and Policy Research. On average, surcharges ended up raising the cost of borrowing for all affected countries by nearly 50 percent.
Until the global financial system is fundamentally reformed, this cycle of debt and misery for emerging nations will keep spinning.
Previously:
• 'Your debt is someone else's asset', a short film from The Intercept, Mollie Crabapple and co., and Astra Taylor
