JOHANNESBURG (Reuters) – Around $1 trillion of debt owed by developing countries should be cancelled under a global deal proposed by the United Nations Conference on Trade and Development (UNCTAD) on Thursday to help them overcome the fallout of the coronavirus pandemic.

The world’s developing economies, which were already struggling with a rapidly growing debt burden, now confront a record global downturn, plummeting prices for their oil and commodities exports and weakening local currencies.

“This is a world where defaults by developing nations on their debt is inevitable,” Richard Kozul-Wright, director of UNCTAD’s Division on Globalisation and Development Strategies, said.

Some 64 low-income countries are already spending more on debt service than their health systems, UNCTAD said in a report calling for a global plan to relieve the burden of debt servicing for poor countries which will need to boost spending on their healthcare systems and economic stimulus

High-income developing countries have debt service obligations of between $2 to $2.3 trillion in 2020 and 2021 alone. Middle and low-income countries have debt service obligations of $700 billion to $1.1 trillion.

(Reporting by Joe Bavier; Editing by Elaine Hardcastle and Alexander Smith)