Debt Burden of Poor Countries Threatening Development

The global debt crisis is deepening, with developing countries facing an unsustainable burden that threatens global development.

Debt service payments by these countries skyrocketed by $74 billion in 2024, reaching a staggering $921 billion. Over two-thirds of low-income countries are either in debt distress or at high risk of it, with more than 3.4 billion people living in countries that prioritize interest payments over healthcare and education.

This crisis has severe implications, including reduced development spending and increased poverty.

Countries are forced to cut development spending to service debt, hindering progress toward Sustainable Development Goals.

The debt burden perpetuates poverty and inequality, undermining economic growth and stability.

To address the crisis, the United Nations report outlines 11 actionable recommendations. These include providing meaningful debt relief to low-income countries, strengthening institutional capacity, improving policy coordination, and managing interest rates.

Global cooperation is also essential, with a platform for borrowers and creditors to engage directly.

The report emphasizes the need for collective action, stating that borrowing is critical for development, but it’s not working for many developing countries. Policymakers must prioritize debt sustainability and implement feasible solutions to mitigate the crisis.

Some key statistics highlighting the severity of the crisis include:

– *Global Debt*: Global public debt reached a record $92 trillion in 2023, with developing countries owing almost 30% of the total.

– *Debt Service Payments*: Developing countries paid an unprecedented $443.5 billion to service their external public and publicly guaranteed debt in 2022.

– *Interest Payments*: Over 54 countries spend more than 10% of their revenue on interest payments, with some countries spending over 30% of their revenue on debt servicing.

– *People Affected*: 3.3 billion people live in countries where interest payments exceed public spending on essential services like education and healthcare.

The crisis requires urgent attention, with experts calling for large-scale debt relief and fair cooperation to prevent developing nations from sinking deeper into financial distress.