The head of the United Nations trade and development body has stressed the need for temporary debt relief for poor nations struggling amid the global economic downturn, stressing this would give them some breathing space and assist in recovery efforts.
Supachai Panitchpakdi, Secretary-General of the UN Conference on Trade and Development (UNCTAD), told a high-level meeting in New York earlier this week that debt-ridden developing countries will be particularly hard-hit without some reprieve in their debt servicing obligations.
“In the current global crisis situation, both debtor and creditor countries would probably be better served if scarcer foreign exchange earnings in the debtor economies were used for the purchase of imports rather than for debt servicing,” he stated.
This is especially important in light of the fact that developing countries have experienced declining export earnings, diminished foreign direct investment (FDI), and reduced remittances from citizens working overseas, as well as rising social and financial difficulties.
Therefore, Mr. Supachai noted, it will take much longer for developing countries to recover from the crisis than developed countries.
He also urged that any monitoring mechanism designed to predict or avert future crises consider trends throughout the global economy, in both developed and developing countries.
UNCTAD is predicting a $2 trillion financial shortfall for developing countries, along with a 30 per cent drop in exports in some sectors. A decline in food production is also likely, as is a recurrence of food crises in some parts of the developing world, the agency noted in a news release.