COVID EFFECTS

Poor countries to lose $12 trillion to corona by 2025 - UNCTAD

In Summary
  • They will also lose a decade of development and face slow economic recovery.
  • The G20 Common Framework debt relief process excludes most developing middle-income countries.
Most poor Kenyans have not been vaccinated against the virus.
KIBERA SLUM: Most poor Kenyans have not been vaccinated against the virus.
Image: COURTESY

Developing countries will lose $12 trillion through 2025 because they lack vaccines and the resources that wealthy countries use to stimulate their economies.

An analysis by  the United Nations Conference on Trade and Development (UNCTAD)  shows  poor countries will lose a decade of development and face slow economic recovery.

“The economic and health crisis is getting worse in most countries,” said Eric LeCompte, a UN finance expert and head of the religious development group Jubilee USA Network.

According to him, developing countries need vaccines and more resources to confront the pandemic. He added that without more aid, there is little chance that poor countries can meet development goals.

According to  UNCTAD , developing country debt increased during the crisis while sales from their exported products fell.

“Debt relief must move more quickly and must include all developing countries mired in this crisis,” noted LeCompte.

He added that developing  countries that are categorized as middle-income countries, face the worst extreme poverty increases and job losses because of the pandemic.

''Unfortunately, these countries are currently left out of processes to cut their debts,'' LeCompte said. 

The G20 agreed to suspend debt payments for 73 of the poorest countries through December and created a process for the same countries to reduce debt.

The G20 Common Framework debt relief process excludes most developing middle-income countries.

The report welcomed the August creation of $650 billion in emergency reserve currency, also known as Special Drawing Rights, to fight the pandemic.

At the same time, the UN agency warned that the resources fall short of the current needs of developing countries. More than $230 billion of the reserve funds reached developing countries.

The United Nations report concludes that more aid, debt relief and changes to the financial system are needed for most countries.

“After the 2008 financial crisis world leaders worked on crisis resolutions tools to make the financial system more stable. Unfortunately, we failed to implement those tools,''LeCompte said.

UNCTAD members meet on October 3-7, hosted by Barbados, to adopt its next four-year work plan