Rising borrowing costs and increasing debt burdens are placing significant strain on developing countries, threatening public spending and access to essential services, according to international officials and advocacy groups.

Belgian Prime Minister Alexander De Croo highlighted that borrowing costs for developing nations have soared to approximately 9%, a level he described as exceptionally high. Speaking on Sunday, De Croo warned that these conditions could deteriorate further in the coming months, with little immediate relief expected from volatile energy markets, ongoing climate risks, or unsettled financial environments.

The rising debt obligations are constraining governments’ ability to maintain funding for critical sectors. Research released by the campaign group Debt Justice revealed that low-income countries identified by the International Monetary Fund (IMF) as being either in or at risk of debt distress have cut their education budgets by an average of 8% since 2019. Broader public expenditures also declined by 2% during this period. Heidi Chow, Executive Director of Debt Justice, emphasized that elevated debt levels are undermining access to vital services such as healthcare and education, urging for debt cancellation measures and reforms to the IMF-administered Common Framework for debt restructuring. Chow particularly called attention to the role of high-interest lenders, including banks and hedge funds, in exacerbating debt pressures.

Acknowledging the need for debt relief, De Croo argued that ongoing negotiations would likely require several months to yield results. In the meantime, he urged multilateral lenders, donors, and development partners to provide more affordable financing options to help governments sustain support for vulnerable populations. He stressed the importance of coordinated international policies to prevent developing countries from facing the crisis in isolation.

De Croo pointed to temporary debt-repayment suspensions implemented during the COVID-19 pandemic as a precedent for possible approaches to the current situation. He also referenced central bank liquidity measures, such as currency swap lines, as tools that could ease financial pressures and avert market freezes. “What would help is a certain level of liquidity,” he said, underscoring the necessity of giving developing countries financial flexibility to implement necessary economic reforms amid the intersecting energy, climate, and debt challenges.