The Human Costs of a Failing Global Debt System

After the economic shocks of the Covid pandemic, and higher global interest rates, the number of countries that have suspended payments on their international debt—declaring default—is at its highest since the early 2000s. Additionally, a record number of countries are at risk of default.

These default events come with staggering costs, which are not limited to a monetary measure. They are strongly associated with declines in living standards, poverty increases, and a deterioration in health outcomes.

Worst of all, these impacts are often felt most strongly among vulnerable populations, such as children, the elderly, and the poor.

In this research brief supported by the Open Society Foundations, economists Clemens Graf Von Luckner and Juan P. Farah-Yacoub conclude that the longer a default continues, the worse the damage caused.