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UN Warns of Rising Over-Indebtedness in Low-Income nations
By Anya sharma | NEW YORK – 2025/06/28 12:33:20
The United nations has issued a warning that increasing over-indebtedness in low-income countries is severely undermining lasting growth goals.
“Borrowing is a development tool.Today, it has become an obstacle, “launched the UN vice-secretary general, Amina Mohammed, who presented this report at a press conference.
She noted that this crisis “mine the foundations of the most fragile economies, adn compromises the future of entire generations”.
According to the report, “Faced with the debt crisis: 11 actions to release sustainable funding,” released in anticipation of the 4th International Conference on Development Financing in Seville (June 30-03 July), over two-thirds of low-income countries are currently over-indebted or face a high risk of becoming so.
in a parallel trend, more than 3.4 billion people,nearly half of the world’s population,reside in countries where debt service consumes more resources than healthcare or education. According to the UN, this represents an increase of 100 million people in just one year.
Speaking at the press conference, the Secretary General of UN Commerce and Development (UNCTAD), Rebeca Grynspan, stated that in 2023, debt service payments in developing countries reached $921 billion, up from $847 billion the previous year.
Paolo Gentiloni, European Commissioner for the Economy, attributed this surge to rising interest rates in global markets, noting that the cost of debt service has nearly doubled in the past decade.
UN Proposes 11-Point action Plan
“Borrowing is a development tool. Today, it has become an obstacle.”
To address this critical situation, the UN report proposes an eleven-point action plan, which Mahmoud Mohieldin, a member of the Secretary General’s group of experts on Debt, described as “technically and acceptable to politically and acceptable” during the hybrid press conference.He emphasized the need to mitigate immediate risks of economic collapse and strengthen prevention systems to avert future crises.
Key recommendations from the report include reallocating and strengthening existing funding, particularly for the most vulnerable countries, establishing a structured dialog platform between creditors and debtors, and reinforcing institutional capacities.
The report also emphasizes the importance of promoting better coordination of economic policies and more rigorous management of debt-related risks.
Frequently Asked Questions
- What is over-indebtedness?
- Over-indebtedness refers to a situation where an entity, such as a country, has difficulty meeting its debt obligations.
- What are the consequences of over-indebtedness?
- Consequences can include economic instability, reduced public spending on essential services, and hindered sustainable development.
- What solutions does the UN propose?
- The UN proposes an 11-point action plan, including reallocating funds, creating dialogue platforms, and improving economic policy coordination.
