Economic pressures arising from recent global challenges such as Covid-19 and rampant inflation, have pushed 165 million people into poverty since 2020, according to the UN Development Programme (UNDP).
The international programme is therefore calling for a "pause" on debt repayments by developing countries in order to reverse the trend.
According to the agency's calculations, it would cost a little over €12 billion to lift out of poverty the 165 million people living on less than €3.25 a day, the equivalent of 0.009% of the world's GDP in 2022. This amounts to about 4% of the public external debt payments of low and middle-income countries, which reached €329 in 2022.
By the end of the year, 75 million people will have fallen into extreme poverty (earning less than €1.90 a day) since 2020. A further 90 million will be below the poverty line of €3.25 a day, according to projections by the United Nations Development Programme (UNDP).
"Countries that could invest in safety nets over the last three years have prevented a significant number of people from falling into poverty," said UNDP boss Achim Steiner in a statement. He noted that "in highly indebted countries, there is a correlation between high levels of debt, insufficient social spending, and an alarming increase in poverty rates."
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Another UN report published on Wednesday showed that some 3.3 billion people – almost half of humanity – live in countries that spend more on debt interest payments than on education or health.
UN secretary-general Antonio Guterres, who has repeatedly called for reform of the international financial institutions, this week again denounced an "obsolete system that reflects the colonial dynamics of the time when it was created".
Recently, the World Bank announced that it would insert new clauses into agreements with developing countries that would allow them to pause debt repayments in case of a climate disaster. The clause will only apply to new loans.
