International Financial System Plunges Countries Into Poverty
Gazan children waiting to receive food aid, 2024. @AJEnglish
October 17, 2024 Hour: 9:19 am
The solution to the debt crisis is not to impose austerity policies, UN Special Rapporteur De Schutter stated.
On Thursday, Olivier De Schutter, the United Nations Special Rapporteur on Extreme Poverty and Human Rights, pointed out that the international financial system is not capable of managing the catastrophic debt crisis facing developing countries.
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“The current system, characterized by unequal representation between high- and low-income countries, unfavorable loan conditions, and unjust debt restructurings, is trapping too many countries in a cycle of poverty,” he said during the International Day for the Eradication of Poverty.
The UN rapporteur emphasized that the rise in interest rates since the COVID pandemic, along with the debt crisis that had already been unfolding for years in the Global South, has left 3.3 billion people living in countries that spend more on debt interest payments than on public services aimed at combating poverty, such as education or healthcare.
“It is appalling that debt repayments to the world’s richest companies are being made at the expense of children’s education or healthcare,” De Schutter denounced.
In 2020, the International Monetary Fund (IMF) urged G20 countries to increase assistance in restructuring the debt of poor nations, he recalled. However, so far, the response from international financial institutions, states, and private lenders “is not working.”
For this reason, De Schutter urged G20 countries to enact laws that compel private creditors under their jurisdiction to participate in the debt relief and called for an “urgent reform” of the international financial system to align it with human rights.
“The solution to the debt crisis is not to stimulate economic growth at all costs, nor to impose austerity policies. It is to cancel or restructure the debt and focus on public investment, especially in social protection, which will restore the long-term prospect of prosperity,” the UN rapporteur concluded.
teleSUR/ JF Source: EFE
