Government debt is rising across the world as countries continue to borrow to release funds for economic recovery amid the pandemic.
The rising debt could lead to a global crisis plagued by unemployment, fuel instability and violence.
Tony Addison, professor of economics at University of Copenhagen, shared an article on the ways in which a global debt crisis can be prevented.
It is estimated more than 100 low to middle income countries will have to pay $130bn in debt service in 2020, out of which approximately half of it will need to be paid to private creditors.
An alternative to avoid such a debt crisis is voluntary sovereign debt buybacks, which can help in reducing debt burdens by obtaining discounts on the face value of sovereign bonds.
A multilateral buyback facility managed by the International Monetary Fund (IMF) can be implemented to manage funds from a global consortium of countries.
To ensure debt reduction, the IMF can conduct auctions and buyback certain amounts of bonds.