London April 11 2023: Lower income country debt payments in 2023 will hit the highest level since 1998, according to figures released by Debt Justice today. External debt payments for 91 countries will average at least 16.3% of government revenue in 2023, rising to 16.7% in 2024, an increase of over 150% since 2011.
Higher debt payments are linked to falling public spending. The last time payments were so high, world leaders created a debt relief scheme for the most indebted lower income countries, which led to 60%-80% of their debts being cancelled.
Heidi Chow, Executive Director of Debt Justice said:
“Debt payments are reaching crisis levels in many countries, hindering the ability of governments to provide public services, fight the climate crisis and respond to economic turmoil. There’s no time to waste, we urgently need fast and comprehensive debt relief schemes across all external creditors, including legislation in the UK and New York to make private lenders take part in debt cancellation.”
Mae Buenaventura of the Debt Justice Program of the Asian People’s Movement on Debt and Development (APMDD) said:
“Debt payments drain Southern countries of much needed development financing to protect its citizens from the ever worsening economic and climate crises. Recent developments in Pakistan and Sri Lanka demonstrate how current international debt mechanisms are spectacularly failing to provide the deep, wide, equitable and permanent debt reduction to prevent the deterioration of living conditions by peoples of the South. Without debt cancellation, Southern debts will continue to rise and along with it, the continued hemorrhage of development finance.”
The figures are for 91 countries classified as low or lower middle income by the World Bank, or as a Small Island Developing State by the UN, where data is available. Countries with scheduled external debt payments over 30% of government revenue between 2022-2024 include Sri Lanka, Laos, Pakistan, Zambia and Dominica.
According to the World Bank, for the countries covered in the analysis, of their external debt payments in 2023 and 2024:
46% are to private lenders (not including Chinese private lenders)
30% are to multilateral institutions
12% are to Chinese public and private lenders
12% are to other governments
In March, the UK parliament’s International Development Select Committee called on the UK government to “consult on the introduction of legislation to compel or incentivise participation of private creditors in the Common Framework [the G20’s debt relief scheme]”.