More than half of all countries in the Global South are critically indebted. An expert explains what consequences this has.
In 2024, countries in the Global South will have to repay around one billion US dollars per day to foreign creditors such as the World Bank, the International Monetary Fund (IMF) or countries like Germany. More money than ever before. 130 of 152 countries examined are at least slightly critically indebted, including Tanzania, Brazil, Morocco, Thailand and Mexico, as shown by the new debt report from erlassjahr.de and Misereor, which
is available to
BuzzFeed News Deutschland
, a portal from
IPPEN.MEDIA
.
55 percent of all countries in the Global South are in a critical (Colombia, Egypt, Kenya, Kazakhstan, India and 55 others) or very critical (Laos, Venezuela, Zambia and Mongolia and 20 others) debt situation. This is slightly less than in the two previous Corona crisis years 2020 and 2021 (67 and 64 percent respectively), but significantly more than in the previous pandemic year 2019 (37 percent).
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Debt Report 2024: How debt affects the local population
In order to cope with the debt burden, countries such as Kenya, Tanzania and Mexico are cutting domestic spending, for example on climate protection. Three young women from Kenya, Tanzania and Mexico tell us what it's like to live in a heavily indebted country in the global south. They talk about a low standard of living, a lack of funds for other important things and the feeling of “being an economic and climatic hostage”.
Malina Stutz, political advisor at the German debt relief alliance Erlassjahr confirms this perception at
BuzzFeed News Germany
. “A critical debt situation affects the local population in several ways. “Most immediately by cutting spending at home to ensure debt service to foreign creditors as much as possible,” she says.
In many critically indebted countries, this is done in “anticipatory obedience” in order to be able to continue to meet high repayment obligations and avoid suspending payments to creditors. “It is therefore a misunderstanding to only identify debt crises where repayments have already been stopped,” says Stutz. If a state can no longer repay its debts, then there are negotiations with the creditors (usually the IMF), in which they usually state further cuts as a condition in order to negotiate the outstanding claims.
More on the topic: Loans for climate projects are driving up Africa's debts
Debt in the Global South: “Women and other vulnerable groups most affected”
The current debt report shows that public spending is being cut most extensively in the very critically indebted states such as Venezuela, Zambia and Mongolia. Cuts would be made primarily in socially sensitive areas, such as social benefits or wages in public education and health. “As a result, women and other vulnerable groups will be most affected by the cuts,” warns Stutz.
In Germany, too, women work more often in social professions than in IT.
The problem: In order to achieve the UN's sustainable development goals, more, not less, public spending is urgently needed. “The basic economic and social rights of the population are sometimes seriously violated by the austerity measures,” explains Stutz. “Debt crises often have a destabilizing effect and lead to a loss of confidence among the population in the countries’ political institutions. This is often countered by those in power through a more authoritarian style of politics, so that, for example, freedom of expression and assembly are restricted and the rights of the executive are greatly expanded.”
In order to cushion the negative consequences of debt, Debt For Climate activists are calling for debt cancellation