LONDON, Apr 14 (Reuters): Emerging countries will pay a record $400 billion to service external debt this year, and 47 of them cannot spend the money they need for climate adaptation and sustainable development without risking default in the next five years, according to a report released on the eve of IMF/World Bank spring meetings.
The report from the Debt Relief for Green and Inclusive Recovery Project (DRGR) found that the 47 developing countries would hit external debt insolvency thresholds, as defined by the International Monetary Fund (IMF), in the next five years if they invested the necessary amounts to hit 2030 Agenda and Paris Agreement goals.
"They would be in such high debt distress that they would be knocking on the door of (default), given the current debt environment, if they were going to try to mobilize that kind of financing," said Kevin Gallagher, director of Boston University's Global Development Policy Center, which led the project.
Many of the at-risk countries are in Africa, including Senegal, Nigeria and Kenya.
A further 19 developing countries lack the liquidity to meet the spending targets without help, though they would not approach default thresholds.
The report called for an overhaul of the global financial architecture, alongside debt forgiveness for the most at-risk countries and an increase in affordable finance and credit enhancements.
"We need to mobilize more capital and bend down the cost of capital for countries if we're going to have any prayer to meet this," Gallagher told Reuters.
The DRGR Project is a collaboration between the Boston University Global Development Policy Center, Germany's Heinrich-Böll-Stiftung, and the Centre for Sustainable Finance at the University of London's School of Oriental and African Studies (SOAS).
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