Kenya's President William Ruto has called for a debt restructuring initiative by developed countries that does not wait for nations to plunge "over the cliff" before providing relief.
No meaningful action on climate change or development can take place in conditions of financial distress, Ruto said in a speech broadcast live from the UN General Assembly in New York.
Citing data by the International Monetary Fund, Ruto said as of last month 10 low-income countries were in debt distress, and 52 were at high and moderate risk of falling into distress.
The 3.3 billion people in these countries were trapped in a vicious cycle over the high cost of financing loans that was diverting resources away from both development and action against climate change, he said.
The debt is "sucking vulnerable countries into a downward spiral of debt and environmental stress," he said.
Ruto called for a new debt initiative that does not wait for nations "to plunge over the cliff into debt distress before providing relief. Rather, the new sovereign debt architecture should extend the tenor of sovereign debt and provide a 10-year grace period for countries that are in debt distress."
Ruto called for increased concessional financing to support vulnerable countries, amounting to $500 billion, and increased liquidity through Special Drawing Rights (SDRs).
"Access should be based on specific needs, not entitlement," he said.
He also called for a revamp of the financial market's risk assessment and "opaque methodologies" employed by credit rating agencies, he said.
The African Union is developing its own credit rating system as member countries have complained that Moody's, Fitch, and S&P Global Ratings do not fairly assess the risk of lending to countries on the continent.
(Editing by Seban Scaria email@example.com)