Recent financial data confirms the scale of these pressures, as developing countries paid about 384 billion dollars in interest on their external debts in 2024. Government interest payments also rose by 102% between 2014 and 2024, compared to a government revenue growth of only 39%. During the period 2018-2024, fiscal space declined in 73% of developing countries. These numbers reveal that the problem is not limited to the accumulation of debts, but extends to the shrinking ability of governments to direct their resources toward investment, public services, and development, which may weaken the productive foundation necessary to achieve growth.
This challenge gains greater importance in light of the decline in official development assistance, which is expected to drop by about 7% during 2026, for the third consecutive year. This means that countries most in need of development financing may face fewer resources at a time when financial markets are becoming more costly and volatile.
Here, we believe that the issue goes beyond the limits of financial sustainability to become a matter related to the future of growth itself. When investments in infrastructure, education, and technology decline, the economy's productivity and its ability to create job opportunities and increase exports are affected. A hard-to-break cycle may arise, starting with high financing costs, then declining investment, weak growth, and ending with a lesser ability to service debt.
Therefore, the solution is not in haphazardly cutting down borrowing, but in redirecting it toward activities that expand productive capacity and generate sustainable returns, alongside improving the management of maturities, diversifying sources of financing, and enhancing concessional financing for the most vulnerable countries.
The message put forward by all these indicators goes beyond rising interest rates; the real challenge is preventing financing from turning from a means to expand the economy into a constraint that drains its resources. Sustainable growth is not measured by the amount of money countries can borrow, but by their ability to turn that money into higher productivity, greater income, and a future less exposed to shocks.
