UN urges governments to tackle recession, scrap debt payment

A graffiti of Brazil's President Jair Bolsonaro wearing a protective mask in Rio de Janeiro, Brazil, Tuesday, April 7, 2020. Brazil is in the midst of a pitched battle over the effectiveness of isolation to avoid the spread of the new coronavirus, with Bolsonaro dismissing the virus severity and publicly taking aim at governors who impose shutdowns that he says could cripple the economy. (AP Photo/Silvia Izquierdo)
A graffiti of Brazil's President Jair Bolsonaro wearing a protective mask in Rio de Janeiro, Brazil, Tuesday, April 7, 2020. Brazil is in the midst of a pitched battle over the effectiveness of isolation to avoid the spread of the new coronavirus, with Bolsonaro dismissing the virus severity and publicly taking aim at governors who impose shutdowns that he says could cripple the economy. (AP Photo/Silvia Izquierdo) (Copyright 2020 The Associated Press. All rights reserved.)

TANZANIA – More than 60 U.N. agencies and international organizations urged governments on Thursday to take immediate steps to address the unfolding global recession and financial crisis wrought by the coronavirus pandemic, especially in the world’s poorest countries.

The U.N.-led Inter-Agency Task Force on Financing for Development said: “Billions of people live in countries teetering on the brink of economic collapse due to the explosive mix of financial shocks fueled by the COVID-19 pandemic, heavy debt obligations and declining official development assistance.”

In response to the crisis, global financial markets have witnessed heavy losses and intense volatility over the last month, it said, and investors have moved around $90 billion out of emerging markets — the largest outflow ever recorded.

In a 207-page report, the task force said that before COVID-19, one in five countries — home to billions of people living in poverty — were likely to see incomes stagnate or decline in 2020, and the pandemic is now likely to affect billions more.

“The economic and financial shocks associated with COVID-19 — such as disruptions to industrial production, falling commodity prices, financial market volatility, and rising insecurity — are derailing the already tepid economic growth and compounding heightened risks from other factors,” the report said. “These include the retreat from multilateralism, a discontent and distrust of globalization, heightened risk of debt distress, and more frequent and severe climate shocks.”

To prevent a debt crisis, task force members called for an immediate suspension of debt payments by the least developed countries and low-income countries that make requests.

The task force, which includes the International Monetary Fund and World Bank, also called for urgent action to reestablish financial stability. It called for ensuring sufficient liquidity, strengthening the global financial safety net, promoting trade, increasing access to international financing, and expanding public health spending.

U.N. Deputy Secretary-General Amina Mohammed said in a video statement helping to launch the report that “COVID-19 is a first of its kind global development emergency, and all countries must rise to the challenge.”