The UN report “A World of Debt,” launched in 2023, highlights that 3.3 billion people – almost half of humanity – live in countries that spend more on debt interest payments than on education or health
It also indicates that countries face the impossible choice of servicing their debt or serving their people.
The World Bank's “International Debt Report,” launched in December 2024, shows that developing countries spent a record $1.4 trillion to service their foreign debt in 2023, as their interest costs climbed to a 20-year high.
Accordingly, UN Secretary-General António Guterres has appointed a group of prominent experts, led by Dr. Mahmoud Mohieldin, the UN special envoy on financing the 2030 Sustainable Development Agenda, to promote actionable policy solutions and galvanize political and public support for resolving the debt crisis.
This work will inform the Fourth International Conference on Financing for Development (FfD4), an intergovernmental process facilitated by the UN, which will take place from 30 June to 3 July 2025 in Sevilla, Spain.
In preparation for the upcoming FfD4 conference, civil society is calling for reforms in the global debt architecture to prevent and resolve debt crises and is proposing a United Nations Framework Convention on Sovereign Debt.
They underscore key issues with the current international financial architecture, such as the lack of a fair and equitable debt resolution mechanism, rules and tools to prevent the accumulation of unsustainable debts, relevant mandatory frameworks to promote responsible lending and borrowing, debt transparency, and approaches to debt sustainability.
International multilateral organizations such as the UN, the IMF, and the World Bank are key actors in this architecture.
For example, the UN provides a platform for dialogue and consensus building, such as the FfD conferences.
The IMF and the WB provide loans and policy advice to countries in debt crises. They generate knowledge, data, and guidance to foster debt transparency and sustainability and strengthen countries' capacity to report and manage their public debt.
Nevertheless, as mentioned above, the surge in debt crises indicates that international multilateral organizations need to provide technical assistance to countries to prevent and resolve debt crises technically. This assistance should be provided through capacity building in debt management and promoting economic resilience as the backbone of debt sustainability.
Building capacity and availing technical assistance for debt management are necessary to modernise and upgrade information systems to record and maintain all debt-related transactions, produce payment projections, and generate reports to support decision-making.
Such systems must be further strengthened to include risk analyses, planning for future borrowings, connectivity, and linkages with financial management information Systems. Debt sustainability analysis and the detection of early warning signals of a debt crisis are also key areas worthy of technical assistance by international multilateral organizations.
For example, there is a need to raise awareness and provide knowledge and training on IMF and World Bank tools such as the Debt Sustainability Framework (DSF). This framework is designed to guide the borrowing decisions of low-income countries and match their financing needs with their ability to repay now and in the future.
With the increasing frequency, complexity, and detrimental impact of global and regional shocks, uncertainty has become the new normal. Governments are continuously being challenged by the availability of budget space and the incurrence of debt to meet the increase in spending.
In responding to this uncertainty, international multilateral organizations need to promote the intellectual and policy discourse on economic resilience as a key pillar for debt sustainability in the long term.
Economic resilience is about enhancing the capacity of people and economies to adapt to change and to absorb, manage, and recover from shocks.
It is not only about the performance and stability of macroeconomic indicators such as economic growth, inflation, the foreign exchange rate, gross domestic product (GDP), the balance of payments, and the balance of trade.
It also includes the early identification and assessment of economic vulnerabilities and the development of the necessary responses, risk management plans, a broad and diversified industrial base, a skilled workforce, the expansion of digitisation and digital literacy, human capital formation, women’s economic empowerment, production and productivity, and economic research institutions to support policymaking.
------
*Naglaa Arafa is a former assistant resident representative and governance team leader at UNDP Cairo.
Short link: