United Nations Development Programme administrator Achim Steiner says many of the world's poorest countries are having to cut other investment in order to service debts.
Speaking during the Hamburg Sustainability Conference, Steiner added that the financial crunch meant countries worldwide were struggling to meet their sustainable development goals.
"For many, least developed countries, they have literally been priced out of the financial markets. They cannot borrow any more money," Steiner emphasized, adding that they must draw down other spending to avoid debt default. "It's a very extreme situation."
Countries like Ghana, Sri Lanka and Zambia have defaulted on their debt in recent years, while others are struggling to make payments after the global interest rate hiking cycle sent borrowing costs higher.
At the same time, the world needs trillions of dollars more per year to meet climate spending goals. Steiner said boosting financing was "absolutely central" to meeting sustainable development goals – something the UNDP is monitoring closely.
"We have to tackle this issue of our international financial architecture and our international financial system," Steiner said. "If not, we are going to fall apart in our endeavour to find answers that our citizens are expecting us to find."
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