Woman Carries Bricks on Ramleela Maidan, a huge plot of land being turned into a coronavirus care center in New Delhi, May 5, 2021 – AFP
Poor and emerging countries have seen the interest they pay on their public debt increase in recent years, unlike rich countries, according to a study to be published on Thursday (24) by credit insurer Euler Hermes.
Ten years ago, interest on debt represented an average of 6% of state budgets, regardless of their wealth.
Today, that level has dropped to 4% for advanced countries, but it has dropped to 7.3% for emerging countries and especially to 13.7% for poorer countries, calculated Euler Hermes.
This is also happening at a time when public debts grew with the covid-19 crisis.
The difference between the interest rates paid by advanced countries and poor countries increased, from 7.4 to 9.5 percentage points, according to the credit insurer, which analyzed the situation of 61 emerging countries and 40 poor countries.
Among the 20 countries whose debt is considered more risky, India, Brazil and South Africa “should manage to avoid default because, in the next two years, most of the debt will be held by national entities and its progress can be controlled” .
Egypt, on the other hand, presents a worrying situation, with 39% of its public debt registered in foreign currency and repayment terms for 2021 and 2022 reaching 15% of the Gross Domestic Product (GDP), highlights Euler Hermes.
Africa, Angola, Tunisia, Ghana and Mozambique are considered by the credit insurer as “highly vulnerable”, with a public debt that exceeds 80% of GDP, an alarming level for developing countries.
China now plays a leading role as a creditor to emerging and poor countries, of which 33 – out of 101 – have borrowed from the Asian giant for more than 5% of their GDP, and the Republic of Congo (Brazzaville ) holds the record, with 32%.
Generally speaking, Euler Hermes considers that “the international community will likely intervene to provide liquidity in case of difficulties, but without being able to offer a comprehensive solution” to the indebtedness of poor and emerging countries.
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source https://pledgetimes.com/cost-of-public-debt-increased-for-poor-countries-and-decreased-for-rich-countries-istoe-money/
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