The Global South is being forced to choose creditors over children | Education
Education Funding Crisis: Debt Payments Outpace Educational Spending in 113 Countries
New data from UNESCO reveals a troubling trend in global education funding, showing that 113 countries, home to a combined population of 6.1 billion, allocate more resources to servicing debt than to educating their citizens. In many low-income nations, such as those most burdened by debt, repayments are nearly four times higher than educational expenditures. Specifically, in 18 of the most heavily indebted countries, governments are spending at least five times more on debt than on education.
These figures highlight not only the challenges facing public finances but also a disturbing political dynamic. Creditors maintain enforceable claims on government revenues, while the educational needs of children are often relegated to promises and development goals. In instances where these priorities conflict, creditor obligations take precedence.
The repercussions of this financial strain are evident: overcrowded classrooms, deteriorating school infrastructure, teacher shortages, and unaffordable school fees lead to students leaving educational systems prematurely. However, these issues are often framed as funding gaps or governance failures, as if governments have chosen to disregard educational needs voluntarily.
In reality, numerous governments are constrained by an international financial system that limits their options. According to the World Bank, developing countries transferred $741 billion more to external creditors in principal and interest from 2022 to 2024 than they received in new financing—the largest net debt outflow in half a century. In 2024 alone, low- and middle-income countries will pay a record $415 billion in interest.
This financial flow often defies the narrative of development assistance. While poorer countries are typically depicted as beneficiaries of aid, significant amounts of public wealth are instead directed to bondholders, commercial banks, multilateral institutions, and wealthier creditor nations.
Funds that could be used to hire teachers, provide school meals, or construct educational facilities are instead being siphoned off to pay debts. This situation is particularly concerning, as education is not merely a government expenditure; it represents an investment in a society’s future. Reducing educational funding may ease immediate debt obligations, but it ultimately undermines productivity, public revenues, and societal resilience.
Current debt contracts are treated as sacred obligations, with violations potentially resulting in credit downgrades and lawsuits. In contrast, the right to education lacks equivalent enforcement mechanisms. No credit rating agency penalizes creditors when a nation cannot provide adequate education, nor do markets respond when schools lack necessary resources.
UNESCO has proposed expanding debt-for-education swaps, which entail creditors canceling or restructuring a portion of a country’s debt in exchange for commitments to invest in educational programs. Such arrangements have shown promise; for example, a recent agreement between France and Ivory Coast financed the construction of over 30 schools in underserved areas.
While these swaps represent meaningful initiatives, they do not adequately address the broader debt crisis. Typically covering only a fraction of a country’s total debt and reliant on creditor approval, these agreements can compromise domestic expenditure decisions and maintain the principle of creditor repayment.
As international assistance for education is projected to decline by up to 30 percent between 2023 and 2027, debtor nations face mounting pressures. Aid is decreasing while debt obligations persist. The common suggestion that developing countries should mobilize more domestic resources does not sufficiently tackle the issue. Although improved taxation and reduced corruption are important, any increases in revenue are often quickly redirected to servicing high-interest debt.
Moreover, calls for austerity measures can hinder education budgets, which primarily encompass recurring expenditures, particularly teacher salaries. Governments constrained by public sector wage freezes cannot effectively address teacher shortages or expand access to education, regardless of how often the international community professes the importance of prioritizing education.
A more substantive approach would involve large-scale debt cancellation for struggling countries, automatic payment suspensions during economic and climate emergencies, and equitable restructuring mechanisms for sovereign debt. Current debt negotiations are fragmented and complicated, leaving debtor nations at the mercy of powerful financial entities.
A binding framework established by the United Nations could facilitate responsible behavior among both borrowers and lenders, preventing obstruction from holdout creditors and prioritizing social rights in determining repayment capacities.
Ultimately, it is essential to recognize that debt repayment should not come at the expense of human development. A debt can only be deemed sustainable if its repayment does not compromise the institutions crucial for a society’s future well-being.
