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Debt service payments outpacing aid, investments in developing countries

WASHINGTON –  Global net financial transfers to developing countries have fallen to their lowest level since the Global Financial Crisis, according to new analysis from The ONE Campaign. As the World Bank/ IMF Spring Meetings kick off in Washington, D.C., ONE is calling on world financial leaders to take action to reverse this dangerous trend and significantly increase the availability – and accessibility – of low-cost lending. 

Debt repayments – both private and official – flowing out of developing countries are fast outpacing aid and investment coming in. These net financial transfers have dropped from their peak of $225 billion in 2014 to $51 billion in 2022 (the most recent year for which data is available). This will have a significant impact on the pace of global growth – and it’s not projected to improve. At this rate, ONE found that flows will drop by another $100 billion – into the negative – in the next two years. 

This isn’t the only challenge putting pressure on leaders and their budgets – higher interest rates are already keeping many countries from accessing vital flows of financing and higher debt payments lead to lower public spending on health, education, and social protection. Worse yet, aid is being diverted away from countries in need. Already in 2024, the EU, France, Germany, and the US have announced aid cuts totaling nearly $9 billion. 

Our analysis also found that:

  • More than one in five emerging markets and developing countries paid more to service their debt in 2022 than they received in external financing. This could rise to more than one in three by 2025.
  • As aid donors celebrate new statistics showing record global aid numbers, donors spent nearly one in five of their aid dollars at home, and aid to Africa has flatlined.

“At a moment of such profound global need, we need bold, concrete action if we hope to tackle the interconnected crises that are affecting livelihoods and health outcomes at the country and regional levels while also stunting global growth,” said Ndidi Okonkwo Nwuneli, President and CEO of The ONE Campaign. “African leaders are ready to come to the table to partner on solutions for more sustainable financing that will allow them to make investments that benefit their people and the global economy. We need global finance leaders to use these meetings to move beyond words towards real action that creates meaningful, lasting change.” 

During this week’s meetings, ONE is pushing global finance leaders to move swiftly on reforms that could unlock hundreds of billions of dollars in low-cost lending. The meetings are also the first high-level gathering to discuss this year’s replenishment of the International Development Association (IDA), the World Bank’s fund for the poorest countries. Many African Finance Ministers have previously called for a tripling of IDA resources from now till 2030. 

Learn more at data.one.org.