A group of over 30 prominent economists, former finance ministers, and a central banker has advocated for immediate debt relief for low- and middle-income countries. Their concerns center around the impact of loan repayments, which they argue hinder governments from effectively funding essential services. This appeal precedes the upcoming World Bank and IMF annual meetings and highlights what they describe as a “defaulting on development” phenomenon even when countries meet their debt obligations.
The letter points out that nations are allocating significant portions of their budgets to debt servicing, impacting investments in areas such as education and healthcare. Currently, African governments spend, on average, 17 percent of their state revenue on debt service. In fact, 32 African countries reportedly dedicate more funds to servicing external debts than to healthcare, while 25 spend more on debt than on education.
Notable signatories of the letter include Nobel Prize-winning economist Joseph Stiglitz and former finance officials like Trevor Manuel. They suggest that limiting the debt servicing ratio to 10 percent of state revenue could result in providing clean water to about 10 million people in 21 countries and prevent approximately 23,000 child deaths annually.
Healthcare in Africa is reportedly under severe strain, with findings from an ActionAid report indicating that an overwhelming majority of health workers in six countries express that their salaries are inadequate for basic living costs. Additionally, many report significant shortages of medicines and essential equipment due to budget constraints.
Current debt relief measures have faced criticism for their ineffectiveness, with G20 initiatives reportedly alleviating only 7 percent of the external debt owed by high-risk countries. The economists called for immediate action to alleviate debt burdens, reform assessments of debt sustainability by the World Bank and IMF, and establish a “Borrowers’ Club” to enhance the negotiating power of these nations.
Source: https://www.aljazeera.com/news/2025/10/13/urgent-debt-relief-demanded-for-africa-amid-public-sector-crisis?traffic_source=rss