African nations devote more money to paying off debt than to providing basic healthcare services – UN Chief

UN Secretary-General António Guterres has called for a significant overhaul of the global financial system to address the pressing issues faced by developing countries.

Speaking at the Paris Finance Summit, Guterres highlighted the burden of high debt and exorbitant borrowing costs on developing nations, stating that many African countries are allocating more funds to debt repayments than to essential healthcare services.

He further noted that over 50 countries are either in default or dangerously close to defaulting on their debt.

To alleviate the financial challenges faced by poorer nations, Guterres advocated a debt relief mechanism that includes payment suspensions, longer lending terms, and reduced interest rates.

He also emphasised the importance of increasing access to liquidity for developing countries through the International Monetary Fund’s Special Drawing Rights.

Additionally, Guterres reiterated his call to end fossil fuel subsidies and enhance climate adaptation funding for vulnerable countries.

Guterres emphasised that these measures would not only combat poverty and hunger but also contribute to economic growth, investments in health and education, and climate action.

He urged urgent action, highlighting that the current international financial architecture, established after World War II, has failed to provide an adequate safety net for developing countries. The Secretary-General described the system as outdated, dysfunctional, and unjust, exacerbating inequalities and denying the poorest nations the necessary financial support.

Guterres highlighted the need for serious reforms in the global financial system, recognizing that change would require political will and power dynamics. However, he stressed the importance of taking immediate action to address the urgent needs of developing and emerging economies.

He proposed the establishment of an effective debt relief mechanism, capitalizing development and climate finance, reforming development banks, and addressing biases in credit rating agencies.

While acknowledging the challenges faced by the international community, Guterres expressed optimism that solutions are possible.

He called on participants at the summit to turn their discussions into tangible actions that can make a difference for millions of people in need. Guterres concluded by urging the meeting to become a rallying cry for urgent action, stating that the world is at a moment of truth and reckoning, and together, positive change is achievable.

In addition to his address at the Paris Finance Summit, Guterres also shared his perspective on global challenges and the transformation of multilateralism during an event at the Paris School of International Affairs, Sciences Po, where he engaged with students and took questions on various topics.