UNCTAD Released Report on Effect of COVID-19 on Countries’ Debt
The UNCTAD has released a report titled, ‘From the Great Lockdown to the Great Meltdown’ highlighting the economic impact of the pandemic and the lockdown conditions on the debt of countries.
About the Report
The report was released by UNCTAD as an update of the Trade and Development Report of 2019. The report highlights that while the pandemic and the lockdown has affected the advanced countries, the developing countries are more at risk because of rising debts. These countries are reliant on ‘hard currencies’ from advanced countries- earned through goods and service exports, remittances from diaspora, borrowing, etc. to repay their external debts and pay for imports.
Global Debt Deal
The report suggested a ‘global debt deal’ to deal with the crisis. It should incorporate these steps:
- Longer and comprehensive automatic temporary standstills to provide macroeconomic breathing space. This will allow the countries to divert the money used for debt repayment to the efforts against COVID-19 and the economic up-liftment post-pandemic.
- Restoring long term debt sustainability through debt relief and restructuring program.
- Establishment of IDCDA or International Developing Country Debt Authority.
UNCTAD or United Nations Conference on Trade and Development is a permanent body under the UN organisation established in 1964. It deals with trade, investment and development issues and is a part of the UN Secretariat. It is headquartered in Geneva, Switzerland.