ISLAMABAD: The Financing for Sustainable Development Report 2020 (FSDR 2020) calls for preventing a debt crisis by immediately suspending debt payments from least-developed countries and other low-income countries that request forbearance.

The report, released on Friday by the UN-led Inter-Agency Task Force on Financing for Deve­lop­ment, stressed that official bilateral creditors must lead and others should consider similar or equivalent steps to provide new finance.

The FSDR 2020 called on governments to take immediate steps to prevent a potentially devastating debt crisis and address the economic and financial havoc wrought by the Covid-19 pandemic.

The report says that debt risks will likely rise further in the most vulnerable countries. Forty-four per cent of least developed and other low-income developing countries are currently at high risk or in debt distress. That’s a doubling of debt risk in under-five years which was 22pc in 2015. This number could rise as Covid-19 and related global economic and commodity price shocks put increasing pressure on some countries, particularly oil exporters, warns the report.

Among other actions, the report called for reestablishing financial stability by providing sufficient liquidity and strengthening the global financial safety net, especially for emerging markets.

Governments should take steps to contain the sharp fall in economic activity and support countries most in need through a globally coordinated response; expanding public health spending; social protection; keeping small businesses afloat; government transfers; debt forbearance and other national measures. The FSDR 2020 calls for significantly increasing access to concessional international financing; and promoting trade and stimulate inclusive growth by eliminating trade barriers that restrict supply chains.

Published in Dawn, April 12th, 2020