UN chief flags COVID-19 debt crisis for developing world

UNITED NATIONS Secretary-General Antonio Guterres said the world faces intense issues of debt sustainability because of the coronavirus crisis that have not been properly understood or addressed, the Financial Times reported on Monday.

“The response to COVID and to the financial aspects [of the crisis] has been fragmented, and geopolitical divides are not helping,” Mr. Guterres told the FT.

Countries such as Brazil and South Africa had borrowed heavily from domestic lenders rather than from foreign investors, at interest rates much higher than those available to rich countries, making the dangers less visible than in previous emerging market debt crises, according to Mr. Guterres.

“They are essentially borrowing in the internal market but maturities are coming down,” Mr. Guterres told FT. “This is a very bad signal.” — Reuters