UNCTAD: Developing Countries Struggle Under Record Debt Burdens

Developing Nations Face Record Debt Burdens

The United Nations Conference on Trade and Development (UNCTAD) has warned that developing countries are struggling under extreme debt burdens.

In 2023, these nations’ external debt reached $11.4 trillion, equivalent to 99% of their export earnings. UNCTAD noted that instead of funding education, healthcare, and infrastructure, governments are forced to prioritize debt repayment.

Currently, 3.3 billion people live in countries that spend more on debt servicing than on health or education.

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Nigeria’s Debt Could Surpass N155 Trillion by 2025

Nigeria’s debt profile is rising rapidly. The Debt Management Office (DMO) reports that as of September 30, 2024, Nigeria’s total debt stood at N142.3 trillion, with a 65% revenue-to-debt service ratio.

Projections suggest that by 2025, the debt could exceed N155 trillion as the government plans to borrow an additional N13 trillion to finance the budget deficit.

UNCTAD Calls for Urgent Reforms

Speaking at the 14th International Debt Management Conference in Geneva, Switzerland, UNCTAD’s Secretary-General, Rebeca Grynspan, emphasized the need for reforms.

“Behind us lies a system that needs reform; before us, the chance to build one that serves people and stability, long-term development, not recurring default,” she said.

She stressed that in most developing countries, interest payments exceed climate investments, limiting their ability to address global challenges.

“This forces countries to choose to default on development to avoid defaulting on debt. No more defaults on debt, but yes on development.”

The upcoming 4th International Conference on Financing for Development will focus on practical solutions to reduce debt distress while preserving sustainable development.

Nigeria’s Steps Toward Debt Stability

Nigeria has taken steps to improve its debt situation. In past years, the country spent up to 97% of annual revenue on debt servicing, stalling economic growth.

However, under the current administration, the revenue-to-debt service ratio has improved, dropping from 97% to 65%.

Recent data from the Central Bank of Nigeria (CBN) also shows a sharp decline in total debt service payments, from $540 million in January 2025 to $276 million in February 2025.

This reduction aligns with ongoing efforts to:

• Restructure debt portfolios
• Improve dollar liquidity
• Ease pressure on the foreign exchange market

Conclusion

The message from UNCTAD is clear: urgent reforms are needed to prevent debt from hindering global progress.

With global cooperation and innovative strategies, countries can escape unsustainable debt cycles and focus on sustainable development.