The global debt crisis continues to escalate: indebted countries in the Global South will have to service more debt to their foreign creditors in 2024 than ever before. One reason for this is the lack of debt cancellation. 130 out of 152 countries analysed worldwide are critically indebted, 24 of them even very critically indebted. This is shown in the Debt Report 2024 by erlassjahr.de and Misereor, which was published today in the run-up to the IMF and World Bank Spring Meetings.
"In 45 countries, more than 15 per cent of government revenue is used to service debt," explains Kristina Rehbein, Political Coordinator of the German debt relief alliance erlassjahr.de. This amounts to more than one billion US dollars per day - more than ever before. "Our research shows that many countries in the Global South therefore literally have their backs to the wall," continues Rehbein. Urgently needed investments in education, health and climate protection are massively hampered by the overwhelming debt service. "In times of high global interest rates, many critically indebted countries can only afford the high debt service if they make significant savings in other areas," warns Rehbein.
Lack of debt relief jeopardises human rights
"The results of current debt rescheduling negotiations in critically indebted countries such as Zambia, Suriname and Sri Lanka show a dangerous trend: creditor interests dominate, so there is hardly any real debt cancellation. It is the people in the debtor countries who pay the price," warns Klaus Schilder, development finance expert at Misereor. Sri Lanka is an impressive example of this. Ahilan Kadirgamar, professor at the University of Jaffna in Sri Lanka and one of the authors of the debt report, describes the situation in the island state: "The population in Sri Lanka is suffering from a sharp rise in energy prices. Households are being disconnected from the electricity grid if people cannot pay the high prices. The cost of living has doubled. Public infrastructure is to be put up for sale in order to mobilise money for debt servicing - all consequences of the measures demanded by creditors in the context of debt restructuring."
Sri Lanka is not an isolated case. "Our analyses show that more than half of the countries analysed are now in a critical or very critical debt situation. Before coronavirus, it was only 37 per cent," explains Klaus Schilder. "Comprehensive debt cancellations could offer a way out of the debt crisis. Without debt cancellations, the UN Sustainable Development Goals are moving into the unattainable distance for the affected countries," Schilder continues.
Setting the political course now
2024 is the year to set the course for the future: Important international processes are due to take place in the year before the federal elections. At the UN Summit of the Future in September 2024 and the preparations for the Fourth International Conference on Financing for Development (FfD4) in 2025, the German government can help ensure that the global community finally sets the course for fair debt relief procedures. "The German government must now fulfil its promise from the coalition agreement and work towards a new debt management consensus," says Rehbein. "This cannot remain with the status quo. The central benchmark must be that human rights in the debtor countries take centre stage again, and not the profit interests of the creditors." The measures that the German government should implement before the end of the legislative period include, for example, the creation of a national law to improve the participation of private creditors in debt relief.
The Debt Report, which is published annually by the German debt relief alliance erlassjahr.de and Misereor, analyses the current debt situation of countries in the Global South and Germany's role in international debt relief policy.
Further information:
Debt crisis" website
