UN: "77 Million People Plunged into Extreme Poverty Due to COVID-19... Developing Countries' Debt Burden Increases"

by Kim Bokyung

Published 13 Apr.2022 16:40(KST)

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] The United Nations announced that due to the prolonged COVID-19 pandemic, 77 million people worldwide fell into extreme poverty last year, and many developing countries are unable to recover due to the burden of debt repayment.

On the 12th (local time), the Associated Press cited a report prepared by the United Nations Department of Economic and Social Affairs, stating that the number of people living in poverty on less than $1.90 a day increased from 812 million in 2019 to 889 million last year.

The report pointed out that poor countries are spending billions of dollars on debt repayment and bearing high borrowing costs, preventing them from investing in education, healthcare improvement, environmental protection, and reducing inequality.

Poor developing countries pay an average of 14% of their income as interest on debt, and many of these countries are forced to cut budgets for education, infrastructure, and capital expenditures caused by the pandemic. Wealthy developed countries pay only 3.5% of their income in interest.

It was also expected that the war in Ukraine would cause increases in energy and raw material prices, supply chain disruptions, rising inflation, slower growth, and increased volatility in financial markets.

Amina Mohammed, United Nations Deputy Secretary-General, said, "The war in Ukraine adds shock to the world amid the complex crises caused by climate attacks on the natural world and the prolonged COVID-19 pandemic," adding, "Humanity is facing a critical moment."

She warned, "If wealthy donor countries increase military spending due to the impact of the war in Ukraine, cut aid to developing countries, and reduce efforts to address the climate crisis, it will be a tragedy," urging countries worldwide to act responsibly so that hundreds of millions of people can escape hunger and poverty.

The report recommended accelerating debt relief for developing countries, expanding eligibility for financial markets to middle-income countries with high debt, reforming the international tax system to address inequalities in access to COVID-19 vaccines and medicines, and accelerating investment in sustainable energy.