Developing countries hit by overlapping crises, UNDP chief warns
WASHINGTON: Rising energy costs, a super El Nino and soaring borrowing costs are increasing pressure on developing countries, with conditions nearing those of the pandemic when the G20 suspended debt payments for the poorest nations, the United Nations Development Programme said on Friday.
The United Nations Development Programme (UNDP) chief warned that developing countries are grappling with a series of overlapping crises, including rising energy costs, a super El Nino, and soaring borrowing costs. These conditions are reportedly reaching the same level as during the pandemic, when the G20 suspended debt payments for the poorest nations. UNDP Administrator Alexander De Croo stated that these issues could have a domino effect, pushing many countries into financial distress.
The IMF-World Bank meetings, scheduled for October 12-18 in Bangkok, will bring together global financial officials to discuss the challenges facing the international economy, artificial intelligence, climate change, and other issues. The IMF-World Bank meetings are expected to highlight the mounting pressure on developing countries as borrowing costs have reached their highest in decades due to heightened concerns about inflation, driven by the Iran war and rising energy prices.
The UNDP's surveys have shown that the conflict in the region has escalated into a global crisis affecting approximately 100 countries, with an estimated 49 million people expected to be pushed into food insecurity by the end of 2027. De Croo emphasized that while some governments have taken measures to protect their citizens from the surge in oil prices, their fiscal reserves are dwindling, and debt levels are rising, leaving them in a precarious situation.
UNDP Chief Economist George Grey Molina noted that a significant shift occurred in September when some governments began allowing higher energy prices to pass through to citizens, resulting in the rollback of subsidies and tax relief. However, he warned that these efforts are insufficient to contain the fiscal and financial burden.
Molina stressed that the bond market and oil price developments over the next 60 days will be critical, as higher prices have already contributed to protests and social unrest in ten countries in September.
According to UNDP, 22 out of the 26 nations surveyed rated the crisis as a high or medium priority, with 13 countries saying it overlapped with an existing economic or fiscal crisis. All 26 countries surveyed agreed that the situation will worsen.
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