The UN called Thursday for a global debt deal, including the creation of an international body to oversee "substantive debt relief" to prevent an economic catastrophe in poorer nations amid the pandemic.
A report from the United Nations Conference on Trade, Investment and Development (UNCTAD) warned that the novel coronavirus pandemic, which has killed nearly 184,000 people worldwide, risks "spreading economic disaster across the developing world."
"The international community should urgently take more steps to relieve the mounting financial pressure that debt payments are exerting on developing countries as they get to grips with the economic shock of COVID-19," UNCTAD Secretary-General Mukhisa Kituyi said in a statement.
The agency reiterated a call from last month to grant $1.0 trillion in debt relief to the hardest-hit developing countries, and called for the creation of an international developing country debt authority to oversee the programme.
"It should be an independent body," UNCTAD's head of globalisation and development strategies Richard Kozul-Wright told a virtual press conference.
He stressed that the International Monetary Fund and World Bank, as creditors, were not suitable to oversee the programme, insisting that "you can't put the fox in charge of the hen hut."
The UNCTAD report pointed out that even prior to the COVID-19 crisis, many developing countries were seeing huge shares of their government revenues going to debt repayments.
In 2018, developing country governments on average spent more than 10 percent of their revenues on debt repayments, but in a number of countries more than a quarter of government revenues were swallowed up this way, with dire consequences for spending on health and social services.
And the situation is set to worsen dramatically in the face of the pandemic, with developing countries due to see repayments on their public external debt alone soar by up to $3.4 trillion by the end of next year, the report said.
Kozul-Wright said developing countries were facing huge financial and trade "squeezes" as the pandemic pushes the world economy towards a deep recession.
"This is a world... where defaults by developing countries on their debts are inevitable," he said.
He welcomed "recent calls for international solidarity", but warned that they so far had "delivered little tangible support for developing countries."
The International Monetary Fund earlier this month cancelled debt repayments due to it by the 25 poorest developing economies for the next six months, with an estimated value of around $215 million, while the G20 leaders announced they would suspend debt service payments until the end of the year for 73 developing countries.
But Kozul-Wright warned that this basically amounted to "kicking the can down the road", since these countries will still need to repay their debt, with interest.
Instead, UNCTAD insisted "more systematic, transparent and coordinated measures towards writing off developing country debt across the board are urgently needed."
In addition to the some $1.0 trillion in debt that UNCTAD believes should be forgiven, it called on the international community to grant an "automatic temporary standstill" in debt repayment for all crisis-stricken developing countries for as long as it takes to get them back on their feet.
This, it said, would help free up resources desperately needed during the crisis.
"The first thing that is needed is breathing space," Kozul-Wright said.