• Nearly half of the world's population lives in countries where debt service exceeds spending on basic social care.
• The Red Flag organization calls this the "worst debt crisis since the beginning of global records."
• Debt service payments in low-income countries have increased significantly, more than twice as much as spending on education and four times as much as spending on health.
• In the past three years, 18 sovereign debt defaults occurred in 10 countries, surpassing the total of the previous two decades.
• The IMF's 2022 annual report shows 60% of low-income countries were already on the brink of a debt crisis, with 34 countries facing distress and 25 countries facing high risk.
• The burden of debt service in the southern part of the world has reached half a trillion dollars annually, forcing more than 100 countries to reduce spending on vital sectors like health and education.
• The situation is more complex for low-income countries, with African countries bearing interest rates four times higher than the United States and eight times higher than Western Europe.
• UNCTAD reports low-income countries allocate 23% of export revenues to debt service, surpassing post-war Germany's ceiling.

A recent report by the International Development Finance Corporation revealed that nearly half of the world's population resides in countries where debt service exceeds spending on basic social care.

This dire scenario represents “The worst debt crisis since the beginning of global records,” according to the Red Flag organization, which commented on the report on its website. The report paints a bleak picture of the financial distress experienced by vast areas of the world.

The report's numbers speak volumes: Debt service payments in low-income countries have risen dramatically, more than twice as much as spending on education and four times as much as spending on health.

Over the past three years alone, 18 sovereign debt defaults have hit 10 countries, a number greater than the total of the previous two decades.

  The IMF's 2022 annual report paints an even bleaker picture, noting that 60% of low-income countries were already teetering on the brink of a debt crisis. Although the proportion has ostensibly dropped to 50%, the harsh reality remains, with 34 countries facing distress and 25 countries facing high risk. Although these statistics are described as a slight improvement, the real seriousness of the situation is still very much present.

According to the Red Flag report, the burden of debt service in the southern part of the world has reached an alarming level of half a trillion dollars annually, forcing more than 100 countries to reduce spending on vital sectors such as health and education to meet their debt obligations.

According to the report, any semblance of relief seems distant, as inflation rears its head in the United States, dashing hopes for imminent cuts in interest rates.

For low-income countries, burdened by high borrowing costs, the situation is more complex. African countries, for example, bear interest rates 4 times higher than the United States and 8 times higher than their counterparts in Western Europe, according to the Red Flag report.

The specter of debt refinancing looms large, exacerbated by dwindling creditor support and strengthening foreign currencies versus domestic bids.

According to the same report, the United Nations Trade and Development Organization (UNCTAD) paints a bleak picture, revealing that low-income countries allocate a staggering 23% of export revenues to debt service, far exceeding the minimal ceiling imposed on post-war Germany of 5%.  

Debt-laden economies revolve in a vicious economic spiral that threatens countries, as debts accumulate faster than economic growth. United Nations estimates reveal a net transfer of wealth from the poorest countries to the richest countries, amounting to a huge amount of $10 trillion over the past two decades.

This huge disparity highlights the urgent need for debt cancellation, while poor populations struggle under the weight of insurmountable liabilities, says the Red Flag report.

As the world grapples with existential crises such as hunger and climate change, the pressing reality of capitalism's inequality comes into sharp focus. Red Flag confirms that the current international system, driven by profit motives, fails to meet the basic needs of the most vulnerable groups in the world, which leads to the perpetuation of the cycle of poverty and exploitation.