Sf we can save the banks, we can save the hopes of developing countries. The collapse of two major banks in recent weeks (Silicon Valley Bank and Credit Suisse) made headlines around the world. In the space of a weekend, more than 250 billion dollars (about 227 billion euros) were mobilized to protect the banking system in the United States and Switzerland.
By contrast, there has been no bailout for dozens of developing countries struggling with a cascade of crises, whether it be climate shocks, the Covid-19 pandemic or the Russian war. in Ukraine. The collapse of these countries is seen as an acceptable option.
The pandemic and the ensuing uneven recovery have hit developing countries hard. Developed countries conducted expansionary fiscal and monetary policies that enabled them to fund the recovery. They are now mostly back to pre-pandemic growth levels.
By contrast, developing countries, faced with high borrowing costs and limited fiscal space, have not been able to do so. In the financial markets, they can be offered interest rates up to eight times higher than those in developed countries – the debt trap.
The climate crisis is unfolding inexorably and continues to disproportionately hit least developed countries and small island developing states. If developed countries have the means to finance adaptation and resilience, the same cannot be said for developing countries. At the same time, Russia’s war in Ukraine has amplified and accelerated a global cost of living crisis, plunging tens of millions into extreme poverty and hunger.
A two-speed world
Sixty percent of low-income countries are in debt distress or at risk of becoming so soon, twice as many as in 2015. Since 2020, African countries have spent more on debt servicing than on health care. Although the situation differs from country to country, the problems are systemic. They are perpetuated by a dysfunctional global financial system that privileges short-term profits and consents too late to insufficient action.
There is very little time left in the world to save the 2030 Agenda and the Sustainable Development Goals – the universally agreed blueprint for peace and prosperity on a healthy planet. The promise of a world in which everyone could have access to health, education, decent work, clean air, clean water and a healthy environment is getting further away every day.
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