High debt African countries being charged ‘extortionate’ rates – U.N. Secretary-General

Secretary-General, Antonio Guterres, said on Saturday that African countries are being charged “extortionate” interest rates by the international financial system, which is not serving the needs of developing countries. He announced a $250 million crisis fund to help African communities at risk of famine.

The UN Chief wants extensive reforms to the international finance structure to be made, to serve developing countries more efficiently. Public debt ratios in sub-Saharan Africa are at their highest in over two decades, according to the .

The pandemic pushed many poor countries into debt distress, and the governments on the continent, including , sought debt restructuring deals under an programme to help them navigate the crisis.

The crisis fund allocated by the UN is its largest-ever allocation, and it will be used to respond to several crises worldwide. Guterres said that the global financial system routinely denies developing countries debt relief and concessional financing while charging extortionate interest rates.

“African countries cannot climb the development ladder with one hand tied behind their backs,” Guterres said, emphasizing the need for change. Ethiopia's Prime Minister, Abiy Ahmed, echoed the call and said that external debt restructuring was necessary to put the economies of the countries back on a growth trajectory.

The Summit brings together leaders from 55 African nations. This year, the summit is focusing on deepening the food and security crises on the continent. Hunger, caused by armed conflicts and extreme weather, has also worsened in several nations.

is on the verge of famine after five failed rainy seasons, with hundreds of thousands of people suffering catastrophic food shortages. Abiy says that one-third of the hungry people in the world are in Africa and called for a critical assessment of this situation.

Reporting by Dawit Endeshaw in Addis Ababa and Duncan Miriri in Nairobi; Writing by Duncan Miriri; Editing by Jane Merriman

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