A new report from UNESCO has shed light on the alarming trend in which developing countries are spending significantly more on servicing foreign debt than on education. In 2025, 113 nations allocated 3.6 times their education budget to debt repayments, with the situation particularly dire in sub-Saharan Africa. This stark imbalance comes at a time when global aid for education is set to decline by as much as 30% in the coming years.
Alarming Financial Disparities
The findings of the UNESCO report reveal that many low- and lower-middle-income countries are trapped in a cycle of austerity, struggling to balance debt obligations with the critical need for educational investment. Specifically, 18 of the most indebted nations spent five times more on debt repayment than on education. In Sri Lanka, this figure soared to an astonishing 16 times, highlighting the urgent need for a reassessment of financial priorities.
Min Jeong Kim, director of UNESCO’s education division, articulated the severity of the situation: “Current approaches really keep the countries trapped in a cycle of austerity, underinvestment and stalled development.” This vicious cycle not only hampers economic growth but also undermines a nation’s ability to mobilise domestic revenue and manage debt effectively.
The Impact of Aid Cuts
The educational landscape is further threatened by significant reductions in aid. Low-income countries have experienced a staggering 21% decline in educational funding since 2023, with projections indicating a potential drop of up to 30% by 2027. Some nations, including Afghanistan, Mali, and Liberia, have already witnessed a more than 40% decrease in educational aid over the past three years.
Tim Jones, policy director at the UK-based campaign group Debt Justice, noted that the growing burden of repayments has reached a 35-year high, with 56 nations allocating nearly a fifth of their total revenue to servicing loans. “Countries’ debt payments have ballooned following a series of shocks from Covid, energy price hikes, and climate disasters,” he remarked. This financial strain often results in cuts to essential services, particularly education and healthcare.
Disruption to Educational Systems
The consequences of these financial decisions extend beyond mere numbers; they disrupt educational systems and impede the future of countless children. Schools often receive insufficient funding, leading to underpaid teachers and inadequate resources. The combined effect of aid cuts and the prioritisation of debt servicing is creating a generation of children whose access to quality education is severely compromised.
In the long run, weakened educational systems may further entrench the cycle of poverty and debt, as nations struggle to develop the workforce necessary to bolster their economies. UNESCO has called for a fundamental change in the structure of debt relief, advocating for long-term arrangements that allow countries to maintain funding for public services.
Rethinking Debt Relief
Advocates argue that it is imperative to rethink the approach to debt relief, particularly regarding private lenders. Jones emphasised the need for reforms that prevent private creditors—often based in the UK and the US—from obstructing agreements aimed at providing relief. He stressed the importance of the UK’s presidency of the G20 in 2027 as an opportunity to advocate for substantial changes to the debt-relief process, including increased debt cancellation and a more expedited procedure.
“The UK needs to ensure that the process is incorporated into English law, so that private creditors can no longer disrupt and hold out from the debt relief,” he asserted.
Why it Matters
The findings of this report highlight a critical crossroads for developing nations, where the need for educational investment clashes with the harsh realities of debt repayment. As financial constraints tighten, the futures of millions of children hang in the balance. A commitment to restructuring debt relief and prioritising education could not only empower these nations to break free from the cycle of austerity but also pave the way for sustainable economic growth and development. The choices made in the coming years will undoubtedly shape the educational landscape and the socioeconomic futures of these countries for generations to come.
