The global risk of debt crises is escalating significantly, particularly in countries already strained by payments to foreign creditors. According to the 2026 Debt Reports, released by the Debt Relief Alliance (Entschuldungsbündnis Erlassjahr) and Misereor, 44 nations in the Global South are carrying extremely high levels of foreign debt, with another 25 countries also categorized as highly burdened. Furthermore, 15 nations face a latent risk of distress.
Experts warn that the required debt service payments are crippling. Malina Stutz of the Debt Relief Alliance noted that countries with very high foreign debt must allocate more than 15 percent of their state revenue just to service interest and principal payments (for example, Angola at 60 percent, and Senegal at 39 percent). Such commitments force a substantial portion of public funds away from fundamental state services like education, health, and infrastructure. For comparison, Germany’s ratio for foreign debt service stands at only about two percent.
Benjamin Rosenthal, an expert in development finance from Misereor, added that the disastrous consequences of the ongoing conflict in the Gulf are compounding the problem. High prices for energy and food further strain state budgets, leading to capital drain and increased borrowing costs across many indebted nations. This escalation, he explains, makes maintaining basic services like schools, hospitals, and social safety nets even more expensive.
The situation is exemplified by Lebanon, which, relative to its state revenue, bears the highest debt service burden globally and is currently in default. “The people there have been struggling for years with the effects of a severe financial crisis that depleted their savings” Rosenthal described. “With the war in the region, they are now literally facing nothing”.
The analysis suggests that relief is not imminent. Stutz pointed out that the public allocation of subsidies and loans to Global South countries has dropped sharply, partly due to reductions in development cooperation funding. While private creditors previously issued loans, these were done at exorbitant interest rates, especially to already heavily indebted states.
Stutz cautioned that this structure creates a risk of debt crises being merely postponed rather than resolved, deepening the countries’ overall dependency. Furthermore, the existing creditor-centric international debt architecture does not offer effective solutions for sustainably overcoming external debt crises. Countries like Ghana, Zambia, Sri Lanka, and Suriname, which undertook restructurings under these creditor-dominated structures in previous years, continue to exhibit some of the world’s highest debt burdens.
Rosenthal criticized what he termed the blocking of essential reforms by Global North countries, specifically citing Germany and the EU. He argued that a radical redesign of the international debt and financial architecture is urgently required. This redesign must include mandatory mechanisms for writing down debt, significantly expanded and binding public development investments, and a fundamental shift away from a development model primarily reliant on private finance.
In conclusion, Rosenthal urged the German government to push for the implementation of these urgently needed, comprehensive reforms, ensuring that affected countries have a stronger voice in the process. He emphasized that fair and reliable debt relief cannot be treated as an act of charity; instead, it must become an integral component of international economic and financial cooperation-a cooperation that enables dignity, participation, and development for all people.