U.N. Secretary-General Condemns ‘Extortionate’ Rates Charged on High Debt African Countries.
UN Secretary-General Antonio Guterres has said that African countries are facing “extortionate” interest rates from the international financial system, which is not fulfilling the needs of developing countries. He has announced a $250 million crisis fund to support African communities at risk of famine.
The UN chief is calling for comprehensive reforms to the international finance structure to serve developing countries more efficiently, especially since public debt ratios in sub-Saharan Africa are at their highest in over two decades, according to the International Monetary Fund.
The pandemic has left many poor countries in debt distress, and African governments, including Ethiopia, have sought debt restructuring deals under an IMF program to help them navigate the crisis. The crisis fund is the UN’s largest-ever allocation and will be used to respond to several crises worldwide. Guterres said the global financial system routinely denies developing countries debt relief and concessional financing while charging extortionate interest rates.
Guterres emphasized the need for change, stating that African countries cannot climb the development ladder with one hand tied behind their backs. Ethiopia’s Prime Minister, Abiy Ahmed, echoed the call and said that external debt restructuring was necessary to put the economies of the countries back on a growth trajectory.
The African Union Summit, which brings together leaders from 55 African nations, is focusing on deepening the food and security crises on the continent this year. Hunger, caused by armed conflicts and extreme weather, has also worsened in several nations.
Hundreds of thousands of people are suffering catastrophic food shortages, and Somalia is on the brink of famine after five failed rainy seasons. Abiy says that one-third of the hungry people in the world are in Africa and called for a critical assessment of this situation.