Global Debate Over Debt Relief in Poor Countries
- Vardui Chtrkyan
- Sep 25
- 3 min read
Updated: Sep 26
By: Syuzanna Zakaryan
In many regions, government spending is more concentrated in paying back former loans than on funding hospitals or schools. Debt relief in underdeveloped countries occurs when the lender cancels or forgives part of the debt owed, thereby easing financial burdens and creating a pathway for new development resources. Without relief, these debts utilize resources that could otherwise aid in developing more evolved societies. This growing crisis has increased demands for debt relief in economically disadvantaged countries. Debt relief in poor countries continues to be one of the most disputed issues in international development because some argue that it reduces poverty, while others raise concerns about financial stability.
Supporters of debt relief argue that it is necessary to fight poverty and provide a chance for countries to recover. Many nations in Asia, Africa, and Latin America spend more on paying back loans than on basic needs such as health care and education, leaving 3.4 billion individuals in countries where debt payments outweigh basic services (UNCTAD, 2025). This creates a cycle where the government cannot invest in developing the country since they have to pay back, which keeps them in poverty.
Additionally, another argument in favor of debt relief is that high debt burdens are becoming increasingly unsustainable due to global economic crises. The World Bank reported that developing countries spent $1.4 trillion on debt payments in 2023, with defaults in countries such as Ghana, Sri Lanka, and Zambia (World Bank, 2024). Rising interest rates have made repayment more difficult, which leaves poor countries stuck in what economists call “economic purgatory.” Relief, whether through cancellation or restructuring, is seen as one of the few ways to allow vulnerable nations to recover and respond to crises such as pandemics or climate change.
In contrast, critics warn that debt relief is not a long-term solution. Some argue that forgiving debts encourages mismanagement, reduces accountability, and risks locking countries out of private financial markets. Concerns have also risen over China, which is the largest lender to developing nations, as it often operates outside international transparency standards; furthermore, international transparency standards are rules that require countries and lenders to openly share information about loans, debts, and financial practices, so deals are fair. In the United States, Congress has debated debt relief as part of broader foreign policy, allocating $52 million in 2023 to support initiatives led by the G20, a group of major economies that addresses global financial challenges, while pushing for greater transparency in China’s lending practices (Weiss, 2023). These debates reveal that debt relief is more than an economic policy, but also about the direction of global cooperation.
Thus, the debate over debt relief illustrates how deeply tied money, politics, and human lives have become. Finding a solution to this debate is essential for shaping the future of global stability. This can start with youth, as they raise awareness, press leaders for fair policies, and continue to fight for a lasting change.
Works Cited
A world of debt 2025: It is time for reform. UN Trade and Development (UNCTAD). (2025, June 26). https://unctad.org/publication/world-of-debt
Weiss, M. A. (2023, June 3). Sovereign debt concerns in developing countries | congress.gov | Library of Congress. https://www.congress.gov/crs-product/IF11880
World Bank Group. (2024, December 3). International debt report 2024. World Bank. https://www.worldbank.org/en/news/press-release/2024/12/03/developing-countries-paid-record-1-4-trillion-on-foreign-debt-in-2023
Comments