LDCs foreign debts amid pandemic should be resolved with development perspective

By Song Wei Source:Globaltimes.cn Published: 2020/4/21 4:08:57

Photo: Xinhua

As nations worldwide fight the coronavirus (COVID-19) pandemic, Least Developed Countries (LDCs) are facing additional risks with a virus-driven debt crisis, according to a recent United Nations report. 

To prevent an economic collapse in these countries, the international community should resolve their debt issues with a development perspective and adopt an inclusive attitude, rather than a "beggar-thy-neighbor" approach that could trigger bigger problems.

The COVID-19 pandemic has rocked global financial markets, forcing investors to withdraw almost $90 billion from emerging markets, the largest fund outflow ever. For LDCs, a potential debt crisis is concerning.

Official development assistance (ODA) has shown downward movement. Due to the impact of COVID-19, many LDCs are in need of outside support. However, before the pandemic, developed countries represented by the US had followed protectionism, and ODA was already weak. Meanwhile, the pandemic also damaged the developed nations' economies. For example, Italy's GDP could fall by more than 10 percent this year.

The international community should not take a hostile approach among other nations but should continue to strengthen cooperation in an open and inclusive manner to help LDCs fight the pandemic. 

China has engaged in investment and financing cooperation with other countries responsibly. When countries face difficulties with loan repayment, China negotiates and resolves their debt issues in a fair and balanced manner. 

China's approach has achieved remarkable results and improved the business environments of the countries in debt. China's efforts have also helped the underdeveloped countries accelerate industrialization and achieve independent and sustainable development.

Regarding the debt problems of LDCs and other low-income nations, the creditor countries should not push them to repay the debts quickly and should take into consideration global financial security with an inclusive attitude while resolving issues with a development perspective.

Innovative financing measures need to be adopted to spur momentum among LDCs to promote the 2030 Agenda for Sustainable Development. 

The private sector has proven it can help increase employment and business opportunities and can enhance development capabilities among LDCs. Facing the challenges of the pandemic, private sector development would help solve large-scale humanitarian disasters and complex development challenges. And lastly, local private sector development would help expand taxation, thereby reducing the LDCs reliance on external assistance.

The author is an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce. bizopinion@globaltimes.com.cn


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