By Emma Farge and Marc Jones

GENEVA/LONDON A United Nations agency urged global finance ministers to give poor countries debt repayment breaks, estimating the COVID-19 pandemic and subsequent surge in inflation and borrowing costs had pushed an extra 165 million people into poverty.

The U.N. Development Programme said the jump meant more than 20% of the world's population - around 1.65 billion people - were now living on less than $3.65 a day and struggling to put food on the table.

Group of 20 finance ministers meeting in India next week will discuss tackling poverty, along with reforming the world's top multilateral institutions and the international debt architecture.

Achim Steiner, UNDP Administrator, called the surge in poverty alarming.

"What this means is a government that can no longer pay its teachers; a government that can no longer employ doctors and nurses in hospitals, that cannot provide the medicines for rural health centers," he told journalists.

All of the additional 165 million people in poverty were in low or lower-middle income countries, UNDP said.

Poverty levels had been gradually dropping until the pandemic but have since risen.

Interest rate rises meant poorer nations now spend twice or three times the share of their revenues on servicing debt compared to wealthier ones, and about 2.3 times more on interest payments than on social assistance.

Steiner said the UNDP was calling for a "Debt-Poverty Pause" so that those countries facing the most acute problems can focus their resources on critical social expenditure.

It would be similar to the since-ended Debt Service Suspension Initiative (DSSI) the G20 set up to help poorer countries during COVID-19.

The UNDP estimates 25 low-income countries spent over 20% of their revenues on debt servicing last year. It was highest number crossing that threshold since 2000 and could rise further if global interest rates continue to rise.

"Particularly for low income countries ...the debt burden has become unsustainable," Steiner said.

Eliminating poverty is one of a series U.N. goals aimed at tackling some of humanity's most entrenched problems by 2030.

U.N. Secretary-General Antonio Guterres has called for sweeping reform of the international financial system to allow for a more equitable distribution of resources.

A report this week showed almost 30% of the $92 trillion of government debt in the world is owed by developing countries.

"We need new mechanisms to anticipate and absorb shocks," Steiner said, adding that mitigating the recent impact on the world's poor would cost just over $107 billion, or 0.065 percent of global GDP.

(Reporting by Emma Farge in Geneva and Marc Jones in London)