In the context of the Covid-19 pandemic, the global debt situation has deteriorated. Countries in all regions of the world will emerge from the pandemic with unsustainable debt levels. While it was possible to avoid a massive sovereign default wave in 2021, in many cases, this was only possible through implementing rigorous austerity measures and taking on new debt.

The debt situation worldwide: 135 out of 148 countries surveyed in the Global South are critically indebted. This means that three more countries have been added to the list as compared with the forecast contained in our Global Sovereign Debt Monitor 2021.

• 39 countries are particularly critically indebted, more than three times as many as before the pandemic. Among them are countries in all income categories and world regions. More than half of the most critically indebted countries are excluded from current G20 debt relief measures.

• The G20 measures implemented so far have not enabled any substantial debt relief. In many countries, debt service can therefore only be maintained at the expense of public services. Already back in 2021, public spending was cut in 83 low- and middle-income countries to enable them to continue with debt servicing.

• The massive expansion of multilateral crisis financing allows private creditors to exit from debtor countries without having to take any losses themselves. In 2020, 58 low- and middle-income countries paid more in interest and principal to external private creditors than they received from them in new loans during the same period.

• Thus, instead of the crisis being swiftly resolved, private claims are being passed on to public budgets. At the same time, the breathing space created by the G20’s debt moratorium, the DSSI, and substantial liquidity support has not been used to make overdue reforms to the debt architecture.