'We should be worried': Finance leaders warn rising interest rates are squeezing low-income countries

cnbc.com:

Leaders of several global financial bodies warned that rising interest rates are increasing pressure on low-income developing countries, around 60% of which are now in or at high risk of debt distress.

Public debt burdens in developing countries have been exacerbated in recent years by back-to-back global crises, with Russia's invasion of Ukraine coming on the heels of the Covid-19 pandemic, while many heavily-indebted nations are also dealing with idiosyncratic pressures from climate events or conflict.

Major central banks around the world have tightened monetary policy aggressively over the past year in order to rein in soaring inflation. A lot of the debt accrued by low-income countries is coming due over the next couple of years, however, and rising interest rates mean these countries will find it increasingly difficult to meet their repayments.

The International Monetary Fund and the World Bank have established a host of relief measures in recent years, including the IMF-World Bank Debt Sustainability Framework, designed to guide the borrowing of low-income countries in a way that ensures stability in public finances.

Meanwhile the G-20 Common Framework, an initiative endorsed by the Paris Club — the group of officials from major lending countries tasked with finding solutions for debtor countries — was established in late 2020 to offer additional support in the form of grants to countries with unsustainable debt.

Ghana in January became the fourth country to seek debt treatment under the Common Framework, alongside Chad, Ethiopia and Zambia.

Yet the implementation, in practical terms, has not been smooth. Zambia, which became the first African country to default in 2020 after the onset of the pandemic, complained