Chapter III.E – Debt and debt sustainability
The debt of developing countries continued to rise in 2019—albeit at a slower pace—and, with it, the risks to debt sustainability. Forty-four per cent of low-income and least developed countries (LDCs) are currently assessed as being at high risk of external debt distress or already in debt distress. COVID-19 and related global economic and commodity price shocks could significantly increase this number. For example, several African countries reliant on oil exports could find themselves in debt distress.
This chapter first examines debt trends at the global level and in developing countries, exploring developments of debt risk assessments, and the underlying changes to public and private debt levels and the composition of debt. The remainder of the chapter explores policy options to mobilize finance for SDG investment while maintaining sustainable debt, through responsible borrowing and lending (debt sustainability assessments, debt management, transparency, and sustainable finance principles), innovative financing instruments, and debt crisis resolution.