Debt Service Costs Threaten Sustainable Development in Developing Countries

Emerging nations are facing a severe financial dilemma as they contend with record-high external debt service costs of $400 billion this year. A recent report by the Debt Relief for Green and Inclusive Recovery Project (DRGR) highlights that 47 developing countries risk insolvency if they pursue necessary investments in climate adaptation and sustainable development to meet the 2030 Agenda and Paris Agreement objectives. This risk arises as these investments would push them beyond the external debt insolvency thresholds set by the International Monetary Fund (IMF), particularly over the next five years.