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Many countries in the Global South take out loans from abroad. This is not a bad thing in itself, as they can use the money to invest in their infrastructure, for example, and thus improve the performance of the economy as a whole.

However, debt can also become a problem: Namely when debt servicing jeopardizes human rights. A high level of foreign debt forces many countries in the Global South to use large parts of their already low government revenue to pay interest and repayments to foreign countries. Money that would be urgently needed to finance poverty reduction, education, the healthcare system or sustainability programs. In 2024, the debt service for countries in the Global South was higher than ever before. Debt relief is urgently needed.

However, there is hardly any room for this in the current system: creditors, often states or private financial institutions from the Global North, dominate the international debt architecture and far too often insist on their right to repayment. It is therefore high time for a fair and transparent sovereign insolvency procedure in which indebted states have a seat at the negotiating table and can assert their rights.

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