The United Nations Conference on Trade and Development (UNCTAD) has said that countries, especially developing countries, are suffocating under debt burdens.
It said that in 2023, developing countries’ external debt hit a record $11.4 trillion, or 99 per cent of their export earnings, reports The Guardian.
This is even as it is projected that Nigeria’s total debt could climb above N155 trillion in 2025, given the government’s plan to borrow an additional N13 trillion to finance the deficit in the 2025 budget.
Nigeria’s debt profile as of September 30, 2024, is N142.3 trillion, according to the Debt Management Office (DMO), with a revenue-to-debt servicing ratio of 65 per cent.
The UN organisation said that instead of financing essential infrastructure, education, and healthcare, rising debt burdens are forcing governments into difficult trade-offs.
It noted that currently, some 3.3 billion people live in countries that spend more on debt servicing than on either health or education.
Addressing the 14th International Debt Management Conference, held in Geneva, Switzerland, between March 17 and 19, 2025, Secretary-General of UNCTAD, Rebeca Grynspan, called for reforms to prevent the current debt crisis from derailing progress.
She said, “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.
“Interest payments outweigh climate investments in almost all developing countries, limiting their ability to respond to global challenges.
“This forces countries to choose to default on their development in order not to default on their debt. No more defaults on debt but yes on development.”
She said that as the world heads towards the 4th International Conference on Financing for Development later this year, the biennial debt conference sets the stage for concrete solutions to reduce debt distress while protecting sustainable development.
The message from the 14th International Debt Management Conference was clear: Urgent reforms are needed to ensure debt serves as a tool for progress rather than a barrier.
With global cooperation and innovative solutions, countries can break the cycle of unsustainable debt and invest in a more resilient and inclusive future.
Nigeria is currently taking some positive steps to change the debt situation in the country. Over the years, the country has been spending a huge chunk of its annual revenue— as high as 97 per cent— on debt servicing, leading to economic stagnation and stifled development.
However, under the present administration, the government has been able to reduce Nigeria’s revenue-to-debt service ratio from 97 per cent to 65 per cent. The Central Bank of Nigeria (CBN)’s latest data on external sector payments also shows that Nigeria’s total debt service payments dropped significantly from $540 million in January 2025 to $276 million in February 2025.
This decline comes amid ongoing efforts by the federal government to restructure its debt portfolio, improve dollar liquidity, and ease pressure on the foreign exchange market.
