In 2026, Global South countries are due to pay nearly US$400 billion to external creditors - double the amount they paid just a decade ago, according to World Bank projections. A third of this goes towards interest rather than paying off the original loans, further diverting public funds into the pockets of foreign creditors.

Behind these numbers lies another story: how mounting debt payments and lending conditionalities imposed by international organisations such as the International Monetary Fund (IMF) impact the daily lives of citizens in borrower countries. “The Real Cost of Debt” can be seen through the experiences of those living in some of the countries hardest hit by the debt crisis in the Global South.

These stories are interconnected, reflecting the systemic failures of the global debt architecture and damaging policies of international finance institutions, which are repeated across the Global South. The real cost of debt is borne by billions of people deprived of access to adequate public services and social protection, suffering from the impacts of climate change, and facing deepening inequalities and poverty. The real cost of debt is the lack of decent jobs and opportunities for younger generations, both today and in the future. Ultimately, the real cost of debt is a system that robs billions of people across the Global South of their present and their future.

In this briefing, we demonstrate how the share of government revenue devoted to servicing external debt in Global South countries has risen from 11 to 16 per cent. In the most impoverished countries, this burden has more than doubled from 8 per cent in 2015 to a record 19 per cent in 2025. As a result, the number of countries spending more on external debt repayments than on either education or public health has gone up from 48 in 2015 to 65 in 2023.

Behind these figures sit widespread cuts in public budgets, including health and education spending and increasing inequalities, including gender inequalities. In this context, countries face mounting obstacles to implementing development plans and advancing the Sustainable Development Goals (SDGs). Cuts to public investment extend beyond public services to necessary infrastructure such as roads, electricity, and digital communications, as well as environmental and biodiversity protection, climate adaptation and just transition. These cuts not only undermine future development prospects but threaten democracy and national sovereignty.

How can we break the cycle of debt?

The global debt architecture cannot deliver fair and effective debt crisis prevention and resolution if it continues to be defined and decided by creditors. Lasting solutions to the debt crisis require a profound reform of the international financial architecture, one that not only ensures fair debt resolution when countries are in crisis but also prevents new crises from happening.

Furthermore, borrowing countries need to be at the table when debt rules and systems are decided. The United Nations is the forum where, based on the international law principle of sovereignty, debt resolution rules can be fairly agreed between all countries.

These are our recommendations for reforms to address the systemic roots of the debt crisis:

1. Reform the international financial architecture: this includes agreeing on a UN Framework Convention on Sovereign Debt that delivers specific rules and tools, including a multilateral debt resolution mechanism, automatic debt relief for external catastrophic shocks, domestic legislation in creditor countries to contribute to effective debt resolution and an intergovernmental process to reform the Credit Rating Agencies (CRAs), alongside other essential reforms.
2. Deliver sufficient financial resources for human rights, development, gender justice, just transition, and climate action through unconditional debt cancellation of illegitimate and unsustainable debts, domestic resource mobilisation, re-imagining development cooperation by restoring its core purpose, and access to sufficient and non-debt-creating climate finance.
3. Transform economic, financial, and trade relations between the Global North and South: Recognise climate and historic debts, advance reparations and transform the economic system through a just transition.

Watch the stories and explore The Real Cost of Debt microsite