Soaring debt burden jeopardizes recovery of least developed countries - UNCTAD LDC Chart of the month March 2022

Well before the COVID-19 outbreak, UNCTAD had repeatedly warned about the rapid debt build-up in developing countries, including the least developed countries (LDCs), highlighting associated risks for their debt sustainability outlook. Partly due to the lack of alternative sources of development finance, for several years debt stocks continued to rise across LDCs. Moreover, the debt composition has gradually shifted towards more costly and riskier instruments such as short-term, private and commercial debt, all of which simultaneously raised debt service and potential costs of renegotiation. COVID-19 significantly exacerbated LDCs’ debt burden.