Debt will increase austerity in Sub-Saharan Africa

Dívida vai aumentar austeridade na África Subsaariana

The director of the debt justice department at the non-governmental organization (NGO) network Eurodad said Thursday that fiscal austerity will increase in coming years for developing countriesparticularly in sub-Saharan Africa.

"The combination of rising debt and insufficient support from multilateral institutions will result in increased austerity in the coming years, as revenues will not rise, or will even fall, and so the only option will be to cut public spending," said Daniel Munevar during his intervention at the online conference on "The Debt Pandemic: What Impacts for Cape Verde, Guinea-Bissau and Mozambique?"

At the conference, organized by the Association for Cooperation among Peoples (ACEP) and the Portuguese Platform of NGOs for Development, Daniel Munevar stressed that "the big question is how it will be possible to overcome a crisis when the political response will be to reduce spending, which implies having less capacity to invest in recovery and meet the objectives of Agenda 2030, Sustainable Development Goals and the Paris Agreement on climate.

During his speech, the activist who advocates a reduction of debt payments for developing countries also warned about the possible rise of conflicts and social instability due to the reduction of economic activity, which implies more unemployment.

"As countries are unable to implement fiscal stimulus and business support measures, economic activity will suffer and this will lead to increased unemployment, becoming a breeding ground for instability and social conflict arising from increased unemployment," he warned.

The covid-19 pandemic, he pointed out, has led to a substantial increase in public debt, not only in developing countries, but globally, Daniel Munevar pointed out, pointing out that the big difference is that the less advanced countries don't have the budget capacity to stimulate the economy and protect the populations with health investments.

"The cost of debt service rose from 6.6% of government revenues in 2011 to 17.4% in 2020, and represents more than 20% of revenues in 32 countries, with Mozambique, for example, costing 45%," the analyst said, adding that "the number of countries spending more on debt service than on health rose from 31 to 62 between 2011 and 2020."

The covid-19 pandemic, he concluded, has broadened into a debt pandemic that threatens to wipe out a decade of economic growth in developing countries, as over the past ten years the debt-to-GDP ratio has risen from 36.2% to 64.7% last year.

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