Debt Crisis Looms for World’s Poorest Nations

by Vins
Published: Last Updated on

The world’s poorest countries will pay 35 percent more in debt interest bills this year due to the COVID-19 pandemic and a dramatic increase in food import prices, as reported by the World Bank. Between 75 countries, most of which as sub-Saharan African nations, will spend roughly $78 billion to meet the repayment requirements of loans primarily obtained in the past decade and heightened interest rates, according to a December 2022 article from the Guardian by Phillip Inman.

Poor countries are facing ever-increasing difficulty repaying their debts due to the rise in the dollar’s value since 2019, severely limiting their ability to finance debts with their own currencies. Moreover, the World Bank expressed concern over debt payments as they consume national spending, deprioritizing spending on education and health services.

“In a plea to rich countries the boss of the Washington-based international development group said social unrest was the likely consequence if poor nations were forced to divert cash from welfare programs to debt interest payments,” Inman wrote.

As the Guardian reported, debt has risen internationally over the last few years to cover the increased welfare and healthcare spending during the pandemic and the increasing cost of gas and foodstuff. Poor nations continue to lack the ability to offset these rising costs through increasing taxes, pressuring nations into taking on loans from private lenders.

Several corporate outlets, including the Wall Street Journal, the New York Times, Bloomberg, and Financial Times, have covered the issue, but much of this coverage remains behind each respective outlet’s paywall, restricting general access. However, most mainstream US media outlets, such as ABC, NBC, Fox News, and CNN, have not covered the story. Despite the massive international implications of debt repayment, it lacks the media coverage necessary to stimulate public discourse. This is particularly concerning given that some articles from corporate press outlets such as the Washington Post have framed the debt crisis around “rival actors” to the United States, such as China, shifting the focus of the crisis to China’s intentions.

Source: Phillip Inman, “World’s Poorest Countries’ Debt Interest Payments Rise 35%, Report Says,” The Guardian, December 6, 2022.

Student Researcher: Cem İsmail Addemir (Illinois State University)

Faculty Evaluator: Steve Macek (North Central College)