New york: Rising borrowing costs are leaving many developing countries with less money to invest in schools, healthcare, infrastructure, and climate action, according to a new report released by the UN trade agency, UNCTAD. Between 2018 and 2024, 99 developing countries, which are home to 5.5 billion people, saw rising interest payments reduce the fiscal space available for development, the new report found.
According to Emirates News Agency, the report shows how rising external borrowing costs, shorter repayment periods, and persistent risk premiums are putting growing pressure on public finances. Key findings include significant disparities in external finance received by developing versus developed countries in 2024. External sources accounted for only 11% of investment financing in developing economies, compared with 38% in developed economies.
The report highlights a stark decline in external financial inflows to developing countries, which fell by 18% between 2014 and 2024, even as domestic financing rose by 60%. Notably, Africa received only 10% of total external inflows to developing countries, despite accounting for 22% of the developing world's population. In contrast, Asia and the Pacific attracted more than 70% of these inflows.
At a time when developing countries continue to pay significantly more for external financing than developed economies, UNCTAD has called for national reforms and stronger international action. The agency emphasizes the need to reduce financing costs and expand the scale of and access to affordable, long-term finance.