Debt situation in the Global South: Private sector as main creditor (82 characters)

Debt situation in the Global South: Private sector as main creditor (82 characters)

The 2024 debt report, published by Misereor and the Erlassjahr.de alliance, shows an alarming picture of the debt situation in many countries in the Global South. Of the 152 countries considered, 130 have an “at least slightly critical” debt situation, with 24 being classified as “very critical”. This shows an alarming increase compared to the pre-pandemic period, where only 37 percent of countries were considered critically indebted. Countries such as Pakistan, Sri Lanka and Lebanon have the highest debts.

The creditor structure includes private, multilateral and bilateral public creditors. Private creditors, including insurance companies and investment funds, hold the majority of claims against public debtors in the Global South. Multilateral creditors such as the IMF and the World Bank are also important. It is emphasized that all creditors, especially private ones, should obligatorily participate in debt relief to support the countries of the Global South.

The high national debt leads to drastic measures such as austerity policies, which in turn affect basic social services. In countries like Sri Lanka, malnutrition, school dropouts and youth unemployment are rising due to such measures. It is emphasized that austerity policies hit vulnerable groups such as women and children particularly hard. The privatization of profits and the socialization of costs by private creditors are the focus of criticism.

The debt report calls for a realignment of debt relief policy mechanisms to take into account the long-term development prospects of the affected countries. It is made clear that the current measures are not sufficient to deal with the situation. The recommendations to the federal government to follow the coalition agreement and focus on debt relief are seen as a necessary step in overcoming the debt crisis.