With the Russia-Ukraine war dragging on, countries already seen under pressure from the knock-off effect of the Covid-19 pandemic, risk seeing the same economic crisis as Sri Lanka, the United Nations has said as it advised the international community to introduce radical financial measures to help countries saddled with debt.

“We’re witnessing a tragic series of events that are unfolding in Sri Lanka right now that should be a warning to anyone who thinks that, you know, it is up to countries themselves to figure out how to deal with this crisis,” said Achim Steiner, Administrator of the UN Development Programme (UNDP), in reference to the South Asian nation’s debt default last month.

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Quoting Steiner, the UN news said, “That default essentially means the country is no longer able to pay – or not only service – its debt, but actually to import fundamental parts of what keeps an economy alive, whether it is petrol or it is diesel, whether it is fuel, whether it is medicines.”

The warning came as new data from the UN Food and Agriculture Organisation (FAO) indicated that the number of people affected by hunger globally rose to 828 million in 2021, an increase of about 46 million since 2020, and 150 million since the outbreak of Covid-19.

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Thursday’s reported stated that the UN Development Programme (UNDP) warned of the soaring inflation rates and have seen an increase in the number of poor people in developing countries by 71 million in the three months since March 2022.

As interest rates rise in response to soaring inflation, there is a risk of triggering further recession-induced poverty that will exacerbate the crisis even more, accelerating and deepening poverty worldwide.

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Developing countries, grappling with depleted fiscal reserves and high levels of sovereign debt as well as rising interest rates on global financial markets, face challenges that cannot be solved without urgent attention by the global community.

Analysis of 159 developing countries globally indicate that price spikes in key commodities is already having immediate and devastating impacts on the poorest households, with clear hotspots in the Balkans, countries in the Caspian Sea region and Sub-Saharan Africa (in particular the Sahel region), according to the UNDP estimates.

This report zooms in on the insights provided by the two briefs of the UN Secretary-General Global Crisis Response Group on the ripple effects of the war in Ukraine.

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Countries have tried to dilute the worst impacts of the current crisis using trade restrictions, tax rebates, blanket energy subsidies and targeted cash transfers.

The report finds that targeted cash transfers are more equitable and cost-effective than blanket subsidies.

The report shows that energy subsidies disproportionately benefit wealthier people, with more than half of the benefits of a universal energy subsidy favouring the richest 20% of the population. By contrast, cash transfers mostly go to the poorest 40% of the population.