According to a report released on Monday by Oxfam International, some of the world’s poorest nations will experience budget cuts of $220 billion over the next five years as a result of a financial crisis that has brought dozens of them dangerously close to default.

According to Oxfam’s research, which was published at the beginning of the IMF-World Bank sessions in Marrakech and was based on IMF outlooks, low- and lower-middle income nations will need to pay back roughly half a billion dollars in interest and debt through 2029.

As rising global interest rates, surging inflation, and a slew of economic shocks following the COVID-19 epidemic batter state finances, a record number of developing countries are in debt crisis. As of March, nine different sovereigns had experienced 14 distinct default occurrences since 2020, according to rating agency Fitch.

Oxfam urged the IMF and the World Bank to focus less on debt restructuring and spending reductions and instead use the crisis to build a fairer system.

Amitabh Behar, interim executive director of Oxfam International, stated that “their answer to the debt crisis is more austerity, and their answer to the financing gap is more loans.” “True win-wins, like fairly taxing the rich, are being left on the table.”

A request for comment was met with an immediate response from the IMF.

Earlier, Oxfam and other assistance and advocacy organisations urged foreign creditors to forgive the debts of developing nations experiencing economic distress.

The research also stated that healthcare spending is outpacing debt servicing payments for the poorest nations by a ratio of four to one.

During face-to-face negotiations in Marrakech, debt restructuring for some of the defaulted countries, like Zambia and Ghana, is anticipated to advance, and the IMF will carry on its discussions with Tunisia, Pakistan, Egypt, and other countries about the conditions of proposed bailout funds.

Prior to this, longer-dated US government yields hit highs not seen since the financial crisis, in part due to positive labour market data. The week came to a close with a report showing an unexpected increase in employment in the previous month, supporting the need for another Federal Reserve rate hike.

During the epidemic, governments used low borrowing costs to protect their economies. Now that they must renew that debt at a much higher cost, worries about unmanageable fiscal deficits are being raised.