Published in Foreign Affairs

By Martín Abregú, Crystal Simeoni, and Ndongo Samba Sylla

Four out of ten people in the world live in a country that spends more money servicing the interest on its sovereign debts than it does on education or health care. Such figures may feel abstract to creditors, which are primarily wealthy countries, multilateral banks​, and large bondholders​, but they could not be more consequential to debt-burdened countries. Every dollar spent repaying sovereign debt is a dollar that could have been spent on public services—building roads, fixing schools, climate-proofing infrastructure, paying doctors and civil servants. It’s in this way that repayment schemes, many of them predatory, help keep developing countries under the weight of debts that seem unshakable.

Low- and middle-income countries—the states of the global South—have a collective external public debt stock of $3 trillion, a figure that has doubled since 2010. That burden amounts to a significant threat to global stability. The countries most vulnerable to climate change, for instance, are also most likely to be hobbled by debt payments. This means that low- and middle-income countries facing acute climate pressures cannot invest in the mitigation measures and infrastructure they need the most. But reaching both climate and development goals requires significant funding. According to some estimates, Africa needs $2.8 trillion by 2030 just for climate action, about 90 percent of it from external sources, including through taking on increased debt burdens. Insufficient action on emissions threatens global stability, including by inflaming poverty and intensifying migration.

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