Why the UN must take the lead on helping countries with debt

Sunit Bagree is senior policy advocacy officer at Results UK, a non-profit which works on reducing poverty

The 16 countries most affected by food crises spend around twice as much on average on foreign debt payments as they do on healthcare.

This shocking figure underlines the urgent need for a radical rethink on how we deal with debt distress because the current system simply isn’t working.

These 16 vulnerable countries are drowning in debt – spending an eye-watering $40.3 billion on foreign public debt payments last year, according to new research by Results UK. They include Bangladesh, Ethiopia, Pakistan, South Sudan and Sudan.

This debt disaster fuels other crises, such as the global malnutrition crisis, which sees the number of people on the brink of famine rising sharply at the same time as more than a billion people live with obesity.

World leaders attending this week’s United Nations Summit of the Future will be discussing debt and malnutrition. These discussions must be honest about the magnitude of the challenge and lead to concrete change.

It is now clear that the G20’s approach to sovereign debt crises, known as the Common Framework, has failed. In November 2022, Chad became the first country to complete the Common Framework process, though it received no debt relief, just some rescheduling of its debts.

Zambia has recently completed the Common Framework process after lengthy delays. Although Zambia did receive some debt relief, its debt burden remains deeply onerous. Outrageously, the Zambian government will have to significantly increase debt payments if its economy performs better than expected – but its payments will not be reduced in the event of a disaster, such as the severe drought that affected the country earlier this year.

What should replace the Common Framework? The best option is a UN sovereign debt restructuring mechanism along with a UN debt cancellation mechanism for countries affected by economic shocks (e.g. high inflation that causes spikes in food prices) or emergencies (e.g. armed conflicts that overwhelm health facilities).

Together these UN mechanisms would be everything the Common Framework is not: legitimate, comprehensive and effective. That is because they would be rooted in international human rights law. Disgracefully, six states, including the UK, voted against the establishment of a UN sovereign debt restructuring mechanism in 2015. The Summit of the Future offers an opportunity to rectify this particular mistake.

Yet wider action to prevent debt crises is also necessary. For example, all lending to governments should be fully transparent and used for the public benefit, with legal sanctions for secrecy or corruption. Similarly, the International Monetary Fund’s influential work on debt needs to be centred on human rights, and the organisation has to stop imposing harmful neoliberal economic policy conditions on vulnerable countries.

As important as global debt justice is, more and better aid remains necessary. Our new report uses the UK as an example of how Global North countries fail to meet international aid targets and spend large sums of aid on asylum and refugee costs in their own countries. This leaves fewer resources for issues such as global nutrition, which already receives less than 1% of all aid worldwide. Moreover, while much aid for nutrition in the Global South is positive, it does not always empower the most marginalised, and at worst can actually exacerbate inequalities.

Debt justice and more and better aid would generate huge resources. Some of this money could and should be spent on tackling malnutrition where the need is greatest.

Fortunately, cost-effective nutrition interventions are well known. Ready-to-use therapeutic food, for instance, is extremely successful at preventing child starvation. More broadly, breastfeeding promotion and support has major health benefits for both babies and mothers. Furthermore, it is often strategic to deliver different interventions, e.g. vitamin A supplementation and immunisation, in an integrated manner. When these and other interventions are delivered in ways that strengthen health and food systems, the benefits can be felt over the long-term.

Without transformative action on financing for development, including debt and aid, countries experiencing extreme food insecurity will not escape the devastation of large-scale malnutrition. Global leaders at the Summit of the Future, who will undoubtedly be enjoying delicious meals, must address this reality head-on.