’Today, 3.3 billion people live in countries that spend more on interest payments than on health, and 2.1 billion live in countries that spend more on interest payments than on education. Interest payments on public debt are therefore crowding out critical investments in health, education, infrastructure, and climate resilience. Governments—fearful of the political and economic costs of initiating debt restructurings—prioritize timely debt payments over essential development spending. This is not a path to sustainable development. Rather, it is a roadblock to development and leads to increasing inequality and discontent. – An excerpt from the recently published ‘The Jubilee Report’, which was chaired by economics Nobel laureate, Joseph Stiglitz

Developing countries, including Pakistan, are under serious debt crisis. More than accumulating the debt itself in recent years while the pace of new debt being taken has significantly slowed down, the main problem due to over-board exercise of austerity policies has been in the shape of interest payments on debt.

At the same time, the existential threat of climate change crisis has been fast-unfolding, which has created greater resilience, and sustainable development needs. Adopted in 2015, the Sustainable Development Goals (SDGs) with target for 2030, include important goals on health, education, and resilience. Lack of growth due to pro-cyclical austerity policies, and also high debt repayment needs have not allowed both low-income, and middle-income developing countries to spend adequately on meeting SDGs. Hence, the application of pro-cyclical policies has negatively affected economic growth, and with-it revenues, and exports and, in turn, have not allowed creation of effective debt repayment capacity in developing countries.

Moreover, lack of multilateral finance under weak multilateral spirit, and absence of an effective sovereign debt restructuring framework – especially one that meaningfully involves the private sector, given significant increase of debt from private sources over the last decade or so –has made it difficult for developing countries to restructure external debt, so that rather than facing huge challenge of gross external financing needs – like in the case of Pakistan – external debt is repaid in a sustainable manner, which means not postponing or reducing much needed spending for enhancing growth, or meeting SDGs.

A recently published seminal ‘The Jubilee Report: A blueprint for tackling the debt and development crises and creating the financial foundations for a sustainable people-centered global economy’ has shed very meaningful light on the fast-approaching global debt crisis situation, how it has negatively impacted growth, development-, and resilience related expenditure. Moreover, it also points out how pro-cyclical policy has exacerbated the debt, and development crisis facing developed countries.

Highlighting the issue with policies that has led to this debt crisis, in terms of the various stakeholders involved, the Report pointed out: ‘All sides share responsibility for the current debt situation: Debtor governments that borrowed too much, often at too high rates and too short maturities, failed to adopt capital........

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