Countries already heavily burdened by payments to foreign creditors face an increasing risk of debt crises amidst the current global situation.
According to the 2026 Debt Reports, published by the Debt Relief Alliance and Misereor on Tuesday, 44 nations in the Global South are experiencing extremely high foreign debt levels, with another 25 countries also facing significant strain, and 15 countries exhibiting latent risk.
Malina Stutz, a Political Researcher at the Debt Relief Alliance, pointed out that nations with very high foreign debt must dedicate more than 15 percent of their state revenue merely to interest and repayment payments to foreign creditors. She highlighted extreme examples, noting that Angola requires 60 percent and Senegal requires 39 percent of their state revenue for these payments. Stutz stressed that “an unbearably high proportion of public revenue in these countries is not flowing into essential state functions like education, health, or infrastructure, but rather to foreign creditors”. For comparison, the service of foreign debt in Germany accounts for only about two percent of its revenues.
Benjamin Rosenthal, an expert on development finance at Misereor, warned that the devastating consequences of the war in the Gulf are further compounding the situation. He noted that high energy and food prices are straining national budgets, leading to capital drainage and higher borrowing costs in many indebted countries. This, in turn, makes maintaining basic services like schools, hospitals, and social safety nets more expensive.
Rosenthal described the situation in Lebanon, stating that the country services the highest debt payments relative to its state revenues globally and is currently in default. “People there have been struggling for years with the effects of a severe financial crisis that stripped them of their savings” he said. “Because of the war in the region, they are now literally standing at nothing”.
The analysis indicated that a cooldown in the situation was unlikely in the immediate future. Stutz noted a clear decline in the public allocation of grants and loans to Global South countries, partly due to cuts in development cooperation funding. Conversely, private creditors had already begun issuing loans at very high interest rates even before the Gulf crisis, particularly to countries already heavily burdened with debt.
Stutz added that this poses the danger that debt crises will drag on rather than being resolved, pushing countries deeper into dependency. Furthermore, the current, creditor-centric international debt architecture offers no effective solutions for sustainably overcoming foreign debt crises. Even countries that pursued restructuring efforts within these creditor-dominated structures recently-such as Ghana, Zambia, Sri Lanka, and Suriname-continue to display some of the highest debt burdens worldwide.
Rosenthal criticized the apparent reluctance of Global North nations, specifically naming Germany and the EU, to implement reforms that would dismantle these problematic structures. He argued that a radical redesign of the international debt and financial architecture is urgently needed. This redesign requires binding mechanisms for debt write-offs, significantly expanded and mandatory public development investments, and a fundamental shift away from a development model primarily focused on private financing sources.
Rosenthal concluded by stating that the German government must advocate for the swift implementation of these necessary, comprehensive reforms to the international financial and debt architecture, enabling affected countries to have a stronger voice and say. He emphasized that fair and reliable debt relief “cannot be an act of grace. They must become an integral component of international economic and financial cooperation-a cooperation that allows for dignity, participation, and development for all people”.
