The global debt crisis has reached alarming levels – with over half of the world’s poorest countries now spending more on interest payments than they do on public services like education and health. This is an injustice and must be reversed.
While the economic slowdown is easing and international interest rates are falling, these changes are not likely to fix a problem that has built up over a decade. In our view, it’s time to change the rules of the game by reforming global debt structures and putting an end to the practice of prioritizing paying back borrowed money over tackling climate crisis and funding vital public services.
During the era of low interest rates, too many developing countries got hooked on debt – borrowing at a record pace and growing their debt beyond sustainable levels. That boom is now coming to a painful end. Debt servicing now drains resources from investment in the future, leaving governments with no means to tackle pandemics and other crises.
Currently, 3.4 billion people live in countries that spend more on interest payments than they do on public spending for education and health. This is not just an injustice, it’s a recipe for poverty. Debt relief is not just a humanitarian imperative, it’s an economic necessity. It will help countries invest in a stronger economy, reduce poverty and improve life for their people. History shows that where low-income countries have had their debts cancelled, children’s chances of finishing primary school have risen.