Urgent action is being demanded to tackle a growing debt crisis among poor countries, whose foreign debt payments soared by 85% between 2010 and 2018.
The Jubilee Debt Campaign says debts in the developing world are now at their highest level since 2004, fuelled by a lending boom driven by low global interest rates.
The debt crisis will be at the top of the agenda of IMF and World Bank talks in Washington next week and at June’s G20 Finance Ministers meeting in Japan.
“The growing debt crisis needs urgent international attention,” said Tim Jones, Head of Policy at the Jubilee Debt Campaign.
“A vital first step is to require that all loans to governments are publicly disclosed, allowing parliaments, media and civil society to hold governments to account for new borrowing.”
The Jubilee Debt Campaign, which lobbies for fairer treatment for indebted countries, used IMF and World Bank databases to calculate that developing country debt payments increased by 85% between 2010 and 2018.
Its analysis shows that average government external debt payments across the 124 developing countries for which data is available increased from 6.6% of government revenue in 2010 to 12.2% of government revenue in 2018 – a rise of 85%.
It says this is the highest level since 2004, when such payments were 13.8% of government revenue.
Jones said that alongside greater disclosure of debt by governments, “In addition, when crises arise, the IMF should stop bailing out reckless lenders, and require debts to be reduced instead, so that the costs of crises are shared between borrower and lender.
“All too often, the lenders who helped to cause the crisis are bailed out, while all the costs of irresponsible lending are borne by people in the borrowing country.
“There is now evidence of falling public spending in countries hit by high debt payments, further undermining progress towards the Sustainable Development Goals.”
The rise in debt has been swelled by low global interest rates, with external loans to developing country governments more than doubling from $191bn per year in 2008 to $424bn in 2017.
The fall in global commodity prices in mid-2014 reduced the income of many governments reliant on commodity exports for earnings.
This also caused exchange rates to fall against the US dollar, which increases the relative size of debt payments as external debts tend to be owed in dollars.