By Michelle Nichols

NEW YORK (Reuters), U.N. SecretaryGeneral Antonio Guterres warned Monday that if unchecked, debt distress in the most vulnerable countries of the globe would put a “dagger through the heart and soul of global recovery” following the coronavirus pandemic.

Guterres spoke out at the Barbados U.N. Conference on Trade and Development, saying that although the international community made some progress, “it is now time for a quantum leap” in support.   

David Malpass, President of World Bank, stated last week that more than half the poorest nations in the world are “in external debt distress” or “at risk”, as of mid-2021.

In August, the International Monetary Fund approved $650 billion in Special Drawing Rights (SDRs). This is the unit of exchange that backs dollars, euros and sterling. Guterres called for substantial re-allocations of unutilized SDRs to countries that are “not symbolic”.

He also requested that the G20 Debt Service Suspension Initiative be extended to next year. It should be available to all nations, even middle income countries.  

“We are aware that in some countries, suspending the payment of debts will not work. Guterres stated that they will require effective debt relief, which should include both private and public creditors.

He said, “It’s deeply unfair that rich nations can borrow cheaply to spend their way into recovery – while low and middle income countries struggle to stay afloat.”