A recent United Nations report reveals that global debt has skyrocketed to an unprecedented $92 trillion in 2022. Governments worldwide, grappling with crises such as the COVID-19 pandemic, have resorted to loans, burdening developing nations. This surge in debt over the past two decades has outpaced economic growth, with both domestic and external debts increasing more than five times. In comparison, overall domestic production has merely tripled since 2002.
The report, published by Reuters, highlights that approximately 30% of the debt belongs to developing countries, with China, India, and Brazil collectively owing 70% of that share. Furthermore, the debt-to-GDP ratio of 59 developing nations exceeds 60%, indicating a significant debt burden. Limited financial access, rising debt expenditures, currency devaluation, and sluggish economic growth further compound the challenges faced by indebted developing nations.
Addressing the global debt crisis, United Nations Secretary-General Antonio Guterres shed light on the concerning disparity in the allocation of resources. He emphasized that more than 3 billion people suffer from their governments spending more on debt servicing than on vital sectors like health and education. These imbalances trap half of the world’s population in a cycle of destruction.
In 2022 alone, global public debt reached a staggering $92 trillion. However, Guterres asserts that this burden predominantly falls on impoverished nations, and the global financial system fails to recognize it as a significant threat. He further deems the escalating levels of public debt as an alarming trend and a systemic failure. While acknowledging the complexities of taking action against this crisis, Guterres underscores its utmost necessity.
As the United Nations releases this report, efforts are underway to address the pressing challenges posed by the mounting global debt crisis. Stakeholders seek to explore viable alternatives to promote economic models that prioritize fairness, social equity, and sustainable growth. By striving to rectify the exploitative nature of the current financial system, they aim to establish a more balanced and inclusive global economy that fosters the well-being of individuals and nations alike.
The interest-based economic framework often exploits individuals, perpetuating an unequal distribution of wealth and resources. Islamic principles advocate for an alternative economic system, emphasizing fairness, social justice, and the prohibition of usury.
Islamic teachings consider interest (riba) as morally reprehensible and detrimental to society. This perspective asserts that excessive accumulation of wealth through interest-driven financial systems leads to economic disparity, undermines social cohesion, and perpetuates exploitation.
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