How the west can stop the global south being strangled by debt | Heather Stewart

"New analysis published as the International Monetary Fund and World Bank met in Washington last week, by the advocacy group Development Finance International (DFI), shows the scale of the burden. It found that across the global south, debt servicing costs now soak up an extraordinary 45% of government revenues, or as much as 70% in low-income countries."

"With interest rates high, governments are now spending three times as much on servicing their debts as they are on education, and more than four times as much as on health."

"But while the group of leading nations acknowledged the scale of the problem in a ministerial declaration in Washington last week, it offered no concrete solutions."

"'There's nothing in the declaration that will make a difference to the lives of people in poor countries,' said DFI's director, Matthew Martin."

Growing borrowing costs combined with cuts to Western aid have produced unsustainable debts across the global south. Ethiopia faced potential legal action after restructuring talks for $1bn collapsed. Private-sector lenders in countries such as Zambia, Chad and South Sudan have delayed or disrupted loan restructurings, prolonging financial distress. Analysis by Development Finance International finds debt servicing now consumes about 45% of government revenues across the global south and up to 70% in low-income states. High interest rates mean governments spend far more on debt servicing than on education or health, while international responses so far offer no concrete relief.

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