Debt Service Watch: the worst-ever global debt crisis

This policy briefing, based on the new Debt Service Watch database, shows that the citizens of the Global South now face the worst debt crisis since global records began. Debt service1 is absorbing an average 38% of budget revenue and 30% of spending across the South, rising to 54% of revenue and 40% of spending in Africa. Spread across all continents, 35 countries are paying more than half of revenue, and 54 over one third. These figures are more than twice the levels faced by low-income countries before HIPC and MDRI debt relief; and slightly higher than those paid by LAC countries before the Brady Plan in the 1980s. More crucially, debt is pushing aside key spending to confront social and environmental crises. Debt service equals combined total spending on education, health, social protection and climate, and exceeds it by 50% in Africa. It is 2.5 times education spending, 4 times health spending, and 11 times social protection spending. Developing countries need another major round of debt cancellation. Yet current debt relief deals are failing to reduce service sharply to free spending room for the SDGs: on average, the most recent debt restructuring deals are leaving debt service at an average 48% of revenue over the next 3-5 years. The international community must take urgent steps to reduce debt service much more sharply, through enhanced debt relief and reduced borrowing costs. Only with these can it provide its fair share of funding for the SecretaryGeneral’s proposed SDG Stimulus, and rescue the Sustainable Development Goals.