UNCTAD chief: Fractured world in crisis demands ‘immediate action’ from G20

29 February 2024

In Brazil, Secretary-General Rebeca Grynspan renews calls for global financial system reforms to ensure a more sustainable and inclusive future for all nations.

A classroom in Mali. Public debt risks diverting resources away from essential services like education in developing countries.
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© UN Photo/Marco Dormino | A classroom in Mali. Public debt risks diverting resources away from essential services like education in developing countries.

At a record high of $92 trillion, global public debt poses not only financial challenges but also a development crisis, UNCTAD Secretary-General Rebeca Grynspan told a meeting of the Group of 20 (G20) held in Brazil on 29 February.

The G20, which comprises the world’s major economies, has three priorities for 2024 under the Brazilian presidency: fighting poverty and hunger, the energy transition and sustainable development, and governance reform.

A lead speaker before the bloc’s finance ministers and central bank heads, the UNCTAD chief urged comprehensive and immediate efforts to address the systematic barriers in the international financial architecture, including the reform of the G20’s Common Framework on debt restructuring and relief.

The UN has warned of the disproportionate weight of debt on vulnerable economies, draining much-needed resources that could otherwise fund vital public services.

It estimates that 36 low-income nations are unable to repay their debts, and 3.3 billion people live in countries where debt payments surpass spending on health or education.

Compounded by rising interest rates, public debt servicing costs are expected to grow by 10% for developing nations, and a hair-raising 40% for low-income countries in 2024.

In addition, higher interest rates exacerbate the debt crisis, leading to a reverse flow of funds from low- and middle-income countries to wealthier nations.

Reforming global governance

The current debt crisis also illuminates the importance of stronger global governance, in the wake of a global pandemic, widening inequalities, mounting geopolitical tensions, and the existential threat of climate change.

Speaking earlier to G20 foreign ministers on 21 February, Secretary-General Grynspan sounded the alarm over a triple deficit of growth, trust and of hope.

Such deficit, if left unchecked, risks fragmentation while jeopardizing peace and shared prosperity in a world under “exponential” changes.

The UNCTAD chief echoed calls from UN Deputy Secretary-General Amina Mohammed for urgent reforms to tackle the imbalances and tensions in societies and global multilateral systems.

“These are reforms that must be assumed with urgency and wisdom,” the secretary-general said in her remarks.

“They are the key to ensuring that we do not fracture under change,” Ms Grynspan concluded.