MORE than 30 leading economists, former finance ministers and central bankers have called for immediate debt relief for low- and middle-income countries.

In a letter released on Sunday the signatories warned that loan repayments are preventing governments of developing countries from funding basic services.

This comes in advance of next month’s World Bank and International Monetary Fund (IMF) annual meetings.

The signatories to the letter, including Nobel Prize-winning economist Joseph Stiglitz, former Central Bank of Colombia governor Jose Antonio Ocampo and former South African finance minister Trevor Manuel, say countries are “defaulting on development” even when they keep up with debt payments.

The letter said: “Countries around the world are paying exorbitant debt servicing costs instead of paying for schools, hospitals, climate action or other essential services.”

The economists say African governments now spend an average of 17 per cent of state revenue on debt servicing. 

Some 32 African nations spend more servicing external debt than funding healthcare, while 25 allocate more to debt than to education.

The letter says capping the average ratio of state revenue used on debt servicing at 10 per cent could provide clean water to about 10 million people across 21 countries, and prevent approximately 23,000 deaths of children below five years of age each year.

The call comes as healthcare systems across Africa continue to come under severe strain.

According to a report by the charity ActionAid published earlier this year, 97 per cent of health workers in six African countries said their wages were insufficient to cover basic costs. 

Almost 90 per cent reported shortages of medicines and equipment due to budget cuts.

The public-sector funding crisis is worsened by shrinking aid budgets. 

The United States, previously the world’s largest aid donor, has cut funding this year as the administration of President Donald Trump has shifted its priorities in favour of its “America First” agenda.

The International Rescue Committee said 10 of the 13 countries hit hardest by the US aid cuts are African.

Economists warn that current debt relief efforts have failed. So far only 7 per cent of the total external debt owed by at-risk countries has been relieved.

They are calling on leaders to urgently reduce debt burdens, reform how the World Bank and IMF assess debt sustainability, and support a “Borrowers’ Club” so countries can negotiate from a position of strength.

The letter concludes: “Bold action on debt means more children in classrooms, more nurses in hospitals, more action on climate change.”