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Where debt and crises collide

Debt payments or social services: Some countries have to choose

Displaced people stand next to a Tuktuk on flooded highway, following rains and floods during the monsoon season in Sehwan, Pakistan, September 16, 2022. Akhtar Soomro/Reuters
Displaced people stand on a flooded highway during the 2022 monsoon season in Pakistan. Last year the country took on more in new debt than it received in humanitarian aid.

It’s harder to withstand a disaster when your government spends more on paying down debt than on social services.


UN figures released last week add more detail to the contours of a global debt crisis that is drawing increasing attention from humanitarians. Meanwhile, rising debt is one of many issues on the agenda as Group of 20 (G20) finance ministers meet this week in India.


The governments of 25 countries spent at least a fifth of their revenue on servicing external debt, according to a July briefing published by the UN Development Programme. Low-income countries spend more than twice as much on interest payments as they do on social assistance, and more than 1.4 times more than on healthcare. 


Some 46 countries from across the income spectrum are spending at least 10% of their revenue on interest payments. They include Bangladesh, Colombia, EgyptKenya, Mexico, Nigeria, and Yemen.


There’s a clear overlap with humanitarian crises and future risks: Half are countries with active humanitarian responses (including regional plans for refugees and migrants). More than a third are considered to be at high or very high risk from emergencies that could overwhelm response resources, based on the Inform Risk Index – one of several measures the humanitarian system uses to gauge the likelihood that a country may need assistance.



The growing debt burden is one of many factors that are driving longer humanitarian emergencies by stripping away communities’ ability to weather crises without resorting to external aid. Money spent on debt is money that doesn’t go to the programmes – such as government social safety nets – or infrastructure that might help prevent an emergency from spiralling into a crisis.


Countries’ rising debt loads have been fuelled by a mix of heavy pandemic borrowing, soaring interest rates amid global economic turbulence, and the fallout from disasters made more volatile by climate change.


The global debt crisis is also a product of a financial system that has historically favoured wealthy nations and continues to punish others. Developing countries pay much higher interest rates and face tougher conditions on their debt, according to a separate UN report on debt released last week.


Leaders from the Global South, including Barbadian Prime Minister Mia Mottley, are the loudest voices calling to overhaul the global financial system to make it fit the needs of climate-vulnerable countries.


During last year’s historic floods in Pakistan, the country took on more in new debt than it received in humanitarian aid, according to one analysis. The UN figures show that Pakistan’s net interest payments added up to nearly 40% of the government’s revenue.

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