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UNDP Debt Update: Development gives way to debt
UNDP Debt Update: Development gives way to debt
February 25, 2025
UNDP has been tracking debt vulnerabilities across developing economies and the availability and appropriateness of international relief measures. Accompanying UNDP's latest Debt Insights update, this UNDP Development Futures Series policy brief presents a snapshot of the current situation and outlook and discusses the needed international policy priorities. Central debt vulnerability indicators remain highly elevated and have continued to worsen across many countries, thereby intensifying a trade-off between development spending and a high and rising debt service burden, with especially devastating consequences in the poorest of countries. For countries that have restructured debt, economic costs have been substantial due to protracted negotiations pending a more formalized and predictable restructuring regime, and deals have delivered inadequate and uncertain relief. If support for debt relief is not stepped up, the situation could easily morph into longer-term solvency crises in more countries. The Fourth International Conference on Financing for Development (FfD4) this year is an opportunity to tackle debt by focusing on ensuring easier access to an effective debt restructuring process, agreeing to a large-scale debt relief initiative for the poorest countries and on ways to lower the cost of borrowing. If the conference fails to deliver, poor countries could be in for another lost decade of development.
