Countries with high debt burdens are suffering from years of austerity, with public spending lower in 2023 than 2015.
The new research, released today by Debt Justice, finds that lower-income country governments cut spending by 5% on average between 2015 and 2023, if they spent over 15% of revenue on external debt payments. In contrast, governments spending less than 10% of revenue on external debt payments increased spending by over 20%.[1]
Falling public spending threatens to reduce access to public services. In Angola, the country with the highest debt payments, spending on social services including health and education has fallen by more than 55% since 2015.
Since 2015 17 out of 63 countries covered in the research had average external debt payments over 15% of revenue. However, because debt payments have increased dramatically in recent years, 30 of the 63 countries now have payments over 15% of revenue, even before recent aid cuts and introduction of US tariffs.
Heidi Chow, Executive Director of Debt Justice said:
“Teachers and nurses are sacrificed as vital public services are gutted to repay high-interest loans to rich creditors. We urgently need a system to cancel debt down to levels that allow investments in poverty reduction. The UK must lead the way by pushing for changes to the debt cancellation system, including passing a law to ensure private creditors take part in debt relief.”
Catherine Mithia, Policy Research & Advocacy Officer at AFRODAD, said:
“Of the 17 countries dedicating 15% of their revenue to external debt repayments, 11 are African, including Ghana and Zambia, despite ongoing debt restructuring efforts. This scenario underscores a global financial architecture that disproportionately disadvantages African nations, resulting in significant outflows of resources to creditors. Compounding this issue is the increase in illicit financial flows, which further hinder the ability of these countries to mobilize domestic resources. This situation highlights the urgent need for a transformative debt agenda and a debt workout mechanism under the United Nations that enhances the voice and representation of African countries in decision-making processes concerning international financial flows.”
The data is being released ahead of the IMF and World Bank Spring meetings (21-26 April) and G20 Finance Ministers meeting (23-24 April) where debt problems in lower-income countries will be discussed. The planned US imposition of tariffs is likely to worsen the debt situation. Countries with the highest debt burdens are all being hit by tariffs, borrowing costs are increasing, and commodity prices – a key source of export revenue for many countries – are falling.[2]
The Debt Justice research uses data from the World Bank and IMF for external debt payments, and data from the IMF to calculate real public spending per person, not including interest payments. While there is wide variety in individual country data, Debt Justice finds that there is a clear pattern of both mean and median spending increasing across groupings of countries as external debt payments fall.
Indermit Gill, Chief Economist of the World Bank, said in December 2024:
“It’s time to face the reality: the poorest countries facing debt distress need debt relief if they are to have a shot at lasting prosperity… Sovereign borrowers deserve at least some of the protections that are routinely afforded to debt-strapped businesses and individuals under national bankruptcy laws. Private creditors that make risky, high-interest loans to poor countries ought to bear a fair share of the cost when the bet goes bad.”[3]
Research by the University’s of St Andrews and Leicester has found that debt relief could lead to 17 million people gaining access to clean drinking water, 5 million more children attending school, and over 59,000 children and mothers’ lives being saved in lower-income countries.[4]
Notes
[1] The full research is available at https://debtjustice.org.uk/wp-content/uploads/2025/04/Public-spending-cuts_04.25.pdf
An Excel document with all the calculations is available at https://debtjustice.org.uk/wp-content/uploads/2025/04/Public-spending-cuts__04.25.xlsx
[2] See: US tariffs will intensify debt crisis in lower-income countries https://debtjustice.org.uk/blog/us-tariffs-will-intensify-debt-crisis-in-lower-income-countries
[3] Foreword to World Bank International Debt Report 2024, pages ix – xi. https://openknowledge.worldbank.org/bitstreams/4246aa14-dffa-415d-a7e8-fa102165a5fa/download
[4] See: https://debtjustice.org.uk/news/debt-cancellation-could-put-5-million-more-children-in-school Full research at: https://medicine.st-andrews.ac.uk/grade/wp-content/uploads/sites/39/2024/08/Debt-Justice_WP.pdf