In recent weeks, a report by UNCTAD, the United Nations Conference on Trade and Development, was published on financing flows to the poorest countries and their costs. These flows are increasingly declining, while costs are rising much more rapidly. --- The purpose of these periodic updates is essentially propaganda: to show that someone cares about the smooth running of things; to demonstrate that, despite the gravity of the situation, something can be done to resolve the problems without calling into question the current social order; and to demonstrate that we must trust governments and intergovernmental organizations, which are the only ones with the power to address global emergencies.
Financing development is becoming increasingly difficult. Financial flows from richer countries are too expensive, too volatile, and too limited to support the investments that the countries UNCTAD defines as developing countries need to achieve the Sustainable Development Goals (SDGs).
Between 2018 and 2024, 99 developing countries home to 5.5 billion people saw the share of public revenues available for development spending decline, due to rising debt interest payments.
The report shows how rising external borrowing costs, shorter repayment periods, and persistent risk premiums are impacting these countries' public finances.
New inflows of direct investment into developing countries, portfolio and otherwise, by non-residents, and bilateral transfers from foreign governments totaled nearly $1.5 trillion. Of these, $722 billion were in the form of equity instruments, $713 billion were debt-related flows, and $50 billion consisted of external transfer payments from other governments. Although domestic financial flows have been larger, at approximately $11.9 trillion, external financing has an outsized influence on the terms and conditions of domestic finance.
There is a significant and growing financing gap estimated at approximately $4.3 trillion annually between the domestic and external financing resources that developing countries can access and the resources they need to finance the investments needed to achieve their sustainable development goals. Governments in these countries would need to invest a total of approximately $17.7 trillion annually (current annual spending of $13.4 trillion) between now and 2030 to achieve their 2030 Agenda goals. If this gap were split between external and domestic sources in proportion to the size of their respective flows in 2024, an increase in new foreign financial flows to developing countries of approximately $476 billion annually would be required. Of this total, approximately $230 billion is expected to come from additional capital flows, $230 billion from additional debt flows, and $16 billion from additional bilateral transfers.
Despite the need to increase investment, foreign financing is increasingly declining in supporting investment in developing countries. In 2024, these countries received significantly less foreign financing than developed countries. Foreign sources accounted for 11% of investment financing in developing economies, compared to 38% in developed economies. Furthermore, external financial flows to developing countries decreased by 18% between 2014 and 2024, while domestic financing increased by 60%. Finally, Africa received only 10% of total external flows to developing countries, despite representing 22% of the developing world's population, while Asia and the Pacific attracted over 70%.
In addition to its limited volume, foreign financing is typically more expensive for developing countries than for developed economies. Rising debt servicing costs have become the main driver of the high cost of capital and have placed significant pressure on public finances. In 2024, these countries paid $384 billion in interest payments on foreign debt instruments. Between 2014 and 2024, the cost of servicing foreign debt grew much faster than the debt stock itself. Since many developing country governments rely on foreign financing to finance their spending, this has placed increasing pressure on public finances.
The pressure on governments is severe: government interest payments in developing countries increased by 102% between 2014 and 2024, while government revenues increased by only 39%. Between 2018 and 2024, 73% of developing country governments lost budget space for education, healthcare, infrastructure, and other public investments as public spending was absorbed by rising borrowing costs.
To put the scale of the problem into perspective, if 94 developing country governments could borrow at the same rates as developed economies, they could collectively save approximately $500 billion annually in interest payments. These savings could finance approximately 375,000 schools; more than 1.3 million primary healthcare centers; and the installation of more than 920 gigawatts of solar capacity annually.
Sovereign external debt conditions have deteriorated sharply since the COVID-19 pandemic and global monetary tightening. Government bond yields have risen, issuance volumes have declined, and lending rates have risen to historic highs.
Conditions improved slightly in 2025. Even so, borrowing costs for developing countries remained above those faced by developed economies.
The report highlights that average government bond yields for developing countries rose from around 5% before the pandemic to 6.8% between 2022 and 2024, before declining to 5.7% in 2025; average spreads for developing countries remained around 1.9 percentage points above the benchmark rates for developed countries in 2025; and finally, average bond repayment maturities fell from around 17 years before 2021 to just 9.5 years in 2025, increasing refinancing risks.
Borrowing remains central to financing public debt, but borrowing conditions are challenging, as interest rates on foreign loans reached a record 4.9% in 2024. Even multilateral lending, traditionally a source of stable and low-cost finance, has seen costs rise sharply in recent years.
The report concludes by calling for coordinated national and international action by governments.
In this report, UNCTAD is forced to admit that debt is a powerful tool for imperialist governments to exert pressure on poorer states. Even the financial instruments developed by China and the BRICS governments do not escape this logic, although they compete with those of the International Monetary Fund and Anglo-American imperialism and therefore offer less extortionate terms.
The report paints a picture of a series of states on the brink of bankruptcy, forced to borrow ever more to avoid this failure. On the other hand, governments can do very little: every action they take has a cost, and to cover that cost they need funding. Imperialist governments, to which the UNCTAD report essentially appeals, have so far been incapable of resolving this situation, like any other of the hundred global problems, because governments are the problem, not the solution.
History teaches us that the only way out of the debt spiral is to abolish debt, but abolishing debt means abolishing government, which is supported by public debt.
Tiziano Antonelli
https://umanitanova.org/governi-strozzini-rapporto-unctad-sui-flussi-di-finanziamento/
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Source: A-infos-en@ainfos.ca
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