By J Nastranis
NEW YORK | 19 March 2025 (IDN) — UN Trade and Development (UNCTAD) Secretary-General Rebeca Grynspan has urged reforms to prevent the current debt crisis from derailing progress.
“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,” Ms Grynspan said in her opening remarks.
She was addressing the 14th International Debt Management Conference in Geneva between 17 and 19 March. Convened every two years, the Conference brought together: over 600 participants from 107 countries, including policymakers, debt managers, representatives of civil society and academics, 20 United Nations entities working together to advance solutions, and nine expert panels focused on addressing debt geopolitics, the debt-climate nexus, governance and transparency.
A key focus was the Debt Management and Financial Analysis System (DMFAS), a signature technical assistance programme where UN Trade and Development has been helping governments strengthen debt management for over four decades.
The DMFAS advisory group met to assess capacity-building efforts and set priorities for the future.
Debt management gets a boost with DMFAS 7 software
The conference also marked the launch of DMFAS 7, the latest version of UNCTAD’s cutting-edge debt management software. The upgraded system enhances debt recording, monitoring and reporting with:
- Stronger security and broader data coverage
- Seamless integration with financial systems
- A redesigned user-friendly interface for efficiency and transparency
By modernizing debt management tools, DMFAS 7 will help governments track and manage debt more effectively, ensuring transparency and stability while keeping development goals on track.
Ahead of the 4th International Conference on Financing for Development (FfD4) from 30 June to 3 July 2025, the 14th UNCTAD Debt Management Conference has contributed to setting the tone for the financing for development agenda, of which debt is a critical element.
Debt burden is stalling development
Many developing countries are sinking into a debt-driven development crisis, with their external debt hitting a record $11.4 trillion in 2023—99% of their export earnings.
Public debt itself is not a problem. It can be an essential tool for financing sustainable development. But debt can become a problem when debt servicing costs increase more than a country’s capacity to pay.
This is now the reality for two-thirds of developing countries. Their public sector debt sustainability deteriorated between 2017 and 2023 as interest payments outpaced government revenues.
Cascading global crises —COVID-19, a worsening climate crisis, a cost-of-living crisis and geopolitical tensions —have aggravated developing countries’ challenges and eroded their fiscal space. Over half of the 68 countries eligible for the International Monetary Fund’s Poverty Reduction and Growth Trust now face debt distress—more than double the 2015 level.
Yet this figure understates the scale of the crisis. Many other developing countries also face mounting difficulties. But most governments are reluctant to default because existing debt workout mechanisms are inefficient and costly. Instead, they prioritize their public debt commitments over development goals and climate action
As a result, countries may not be defaulting on their debt, but they are defaulting on their development. Surging debt-service costs already crowd out vital investments. Today, 3.3 billion people live in countries that spend more on debt payments than on health or education, including three billion in middle-income countries. [IDN-InDepthNews]
Image: Helmand, Afghanistan. High debt burdens can severely limit countries’ ability to invest in essential services for sustainable development. Source: UNCTAD
