Nearly 3.3 billion people suffer under governments that spend more on interest payments than education or health, said Asia Pacific Movement on Debt and Development (APMDD) today (18 April) demanding accountability from the International Monetary Fund (IMF) and World Bank.
“For many decades until today, the IMF-WB, with the backing of rich countries, have been at the forefront of shaping an international financial architecture that systematically enables the transfer of wealth to the North, perpetuating a deepening cycle of indebtedness, poverty, inequality and environmental degradation in Global South countries,” reads a press release by APMDD at a time when the major financial agencies holding their Spring Meeting in Washington, DC.
According to the regional alliance, the IMF-WB continues to push loans as solutions despite the worsening crisis. But their COVID-19 debt relief schemes, which only delayed payments, have backfired.
Now, suspended debts are due in 2025, with private lenders, who now hold over 60% of sovereign debt, unwilling to help, APMDD further said.
The numbers tell a grim story
Total public debt, domestic and external, reached $92 trillion in 2022, increasing five-fold since 2000.
Southern governments are drowning in debt, with 59 countries seeing debt levels exceed 60% of GDP.
The number of countries with public debt levels exceeding 60% of GDP continues to rise, from 22 in 2011 to 59 in 2022.
Long-term public external debts alone of low- and middle-income countries, excluding China, amount to a staggering $3.3 trillion.
Critics slam the IMF-WB for favouring creditors over people.
On average, debt service consumes 35% of budget revenue across 139 WB-borrowing countries, with significantly higher shares among low- and lower-middle-income countries (LIC and LMIC), reaching 57.5% and 44.5%, respectively.
Global South countries allocate more funds for debt service than for education, health, and social protection combined, with low- and middle-income countries totaling US$443.5 billion in 2022, the highest level in history.
This is projected to increase by 10% this year compared to the previous two years, according to the WB’s estimates.
APMDD asserts the illegitimacy of these loans, pointing out that some have been fully paid over the decades despite their harmful impact on present and future generations.
They argue that it's high time for the IMF and the World Bank to be held accountable for their historical role in exacerbating systemic debt and climate crises.
"We demand reparations from the IMF and the WB for their role in exacerbating systemic debt and climate crises," declares APMDD.
Their demands include:
1. Unconditional and immediate debt cancellation, especially targeting illegitimate debts, including those stemming from fossil fuels.
2. A cessation of fossil fuel lending, recognising the detrimental effects on both the environment and communities.
3. An end to pushing loans for climate action, which unfairly burdens developing countries with responsibilities they did not cause.
