Addressing debt vulnerabilities of the least developed countries

Debt crises in least developed countries (LDCs) were a possibility long before the COVID-19 pandemic and the emergence of the polycrisis. External debt stocks have reverted to levels last seen in the 1990s prompting the launch of the Heavily Indebted Poor Countries (HIPC) initiative by the International Monetary Fund (IMF) and the World Bank in 1996. Debt service on public and publicly guaranteed debt (PPG) in LDCs in 2022 was three times higher than in 2011. Moreover the number of LDCs in debt distress or at high risk of distress has increased. In 2019, total external debt service in LDCs exceeded government expenditure on social sectors such as health and education (UNCTAD, 2022a), and these same sectors also faced enormous challenges during the pandemic. In 2021, LDCs spent 4 or 5 times more on PPG debt service and total debt service, respectively, than in 2009, which points to their deteriorating and unsustainable debt situations.

Sustainable Development Goals:

Climate Action

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