GNV News, 14 July 2026

According to a report released on 10 July 2026 by the United Nations Educational, Scientific and Cultural Organization (UNESCO), in 2025 the amount of debt repayment exceeded public spending on education in 113 low- and middle-income countries. In low-income countries in particular, spending on debt repayment is 3.8 times the amount spent on education.

One background factor is a structural imbalance in which education spending is not on an equal footing with debt repayment. In recent years, domestic debt, which has come to account for an average of 62% of total debt service, is paid out of the same current budget as teacher salaries and other expenditures, and therefore competes directly with the education budget. Debt repayment is a contractual obligation; failure to pay constitutes default and leads to a loss of national creditworthiness. Social spending, including education, on the other hand, is often considered “adjustable” because it is not a legal obligation, and thus tends to be cut when public finances are tight. Within social spending, education is in direct competition with health, social security, and emergency expenditures, making it particularly prone to cuts. In practice, since 2017, for every additional US dollar spent on debt repayment, education spending has fallen in real terms by US$ 0.28.

On top of this structural issue, in recent years the burden of servicing existing debt, including external debt, has itself reached record levels, mainly due to rising interest rates, while relief measures have been inadequate. Domestic debt is often short-term and at market interest rates, making it highly vulnerable to sharp spikes in interest rates. As for external debt, most new lending now comes from private funds and new emerging creditor countries that are not members of the Paris Club (*), making coordination of interests more complex and delaying the implementation of relief. It has also been criticized that some private creditors based in the UK and US seek to maximize their profits by demanding full repayment on their own, even when a multilateral debt relief agreement is close to being reached. In this context, the heavy burden of debt service is expected to continue into the 2030s, and new borrowing is being used not for development, including education, but to repay existing debts.

The ratio of debt service to expenditures and revenues is particularly high in low-income countries, countries vulnerable to climate change, and countries facing structural constraints. Current step-by-step debt restructuring, rescheduling, and fiscal austerity measures are only stopgap solutions and risk triggering a vicious cycle of austerity, underinvestment, and stalled development. At the same time as the United States and Europe are cutting aid for education, this situation could lead to the entrenchment of learning gaps and the loss of long-term growth opportunities in education. In response, there is a growing call not only for further debt cancellation and faster procedures, but also for legal frameworks to ensure that private creditors cannot obstruct debt relief agreements.

(*) An informal group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties faced by debtor countries. It began in 1956 when Argentina agreed to meet its public creditors in Paris, and since then the Paris Club has reached 485 agreements with 102 different debtor countries. The total amount of debt treated within the framework of Paris Club agreements reaches US$ 616 billion.

Learn about the history of debt in Africa → “Africa’s economy: Can it break free from the history of debt?”

Learn more about the relationship between the global financial system and low- and middle-income countries to date → “The World Bank and the International Monetary Fund: Fueling poverty?”

Learn more about the status of development in low-income countries and progress toward the SDGs → “Leaving no one behind?”

Learn more about the external debt of low- and middle-income countries → “US$ 31 trillion in debt holding back development in low- and middle-income countries”

Students at Darsalam School, Mali (Photo: USAID in Africa / Flickr [United States government work])