Developing countries are in danger of facing ‘a lost decade’ as their pathways to achieving the Sustainable Development Goals (SDGs) and Paris Agreement on climate change targets are effectively derailed

The urgency of fiscal justice

With Bhumika Muchhala

While low- and middle-income countries face austerity measures by early 2021, a very different directive is offered to developed countries. According to the Fiscal Affairs Department of the IMF, most ‘advanced economies that can borrow freely will not need to plan for austerity to restore the health of their public finances’.

Unhindered access to financial markets and near-zero interest rates available to developed countries means that they have the exclusive privilege of escaping the fate of raising taxes and cutting public financing for public goods.

In contrast, the poorest countries in the world confront the highest costs of borrowing. Interest rates for African countries range between 5% and 16% on 10-year government bonds. For sub-Saharan African economies, interest repayments constitute the highest, and fastest-growing, expenditure item in their public budgets.

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