Introduction

Public debt plays a crucial role in the development of countries as it helps governments finance their expenditures and invest in their people. However, when public debt grows too much or too rapidly, it becomes a heavy burden. Unfortunately, this is the current situation in many developing countries where public debt has reached alarming levels. This is primarily due to the increased need for financing in response to various crises such as the COVID-19 pandemic, cost-of-living crisis, and climate change. Additionally, the financial architecture in place makes it difficult and expensive for these countries to access adequate financing. As a result, the weight of debt poses significant challenges to development, hindering their ability to respond to emergencies, address climate change, and invest in their people and future.

The Choice between Debt Servicing and Meeting People’s Needs

Many developing countries find themselves in the impossible position of choosing between servicing their debt or meeting the needs of their people. Shockingly, there are currently 3.3 billion people living in countries where more money is spent on interest payments than on critical areas like education or health. This situation disrupts prosperity and poses a threat to both people and the planet. It is imperative that this scenario changes to ensure a better future for all.

United Nations’ Roadmap for Addressing the Global Debt Burden

The United Nations has outlined a roadmap of multilateral actions aimed at addressing the global debt burden and achieving sustainable development. This roadmap is detailed in the Our Common Agenda Policy Brief on Reforms to the International Financial Architecture and the SDG Stimulus. The brief focuses on three key areas of action that need to be taken:

1. Tackling the High Cost of Debt and Rising Debt Distress Risks: Efforts should be made to reduce the high costs of debt and the risks associated with experiencing significant levels of debt distress.

2. Massively Scaling Up Affordable Long-Term Financing for Development: There is a need to ensure access to affordable long-term financing for development projects on a large scale.

3. Expanding Contingency Financing for Countries in Need: It is essential to expand contingency financing options to support countries in times of crisis and emergencies.

By implementing these actions, it will be possible to unlock the resources required to create a more prosperous, inclusive, and sustainable world.