A call to reform sovereign credit assessments and lower unjust borrowing costs

Statement by Marcos Neto, UN Assistant Secretary-General, and Director of UNDP’s Bureau for Policy and Programme Support, at the 4th Financing for Development Conference side-event, “Debt Solutions for Resilience and Reform: Financing the 2030 Agenda in Africa and Beyond”

July 2, 2025

Excellencies, colleagues, and partners,


Let me begin by warmly thanking the Arab Republic of Egypt for organizing this important event and for its leadership in championing debt solutions that place sustainable development at the centre. Egypt’s continued efforts to elevate the voice of the Global South and promote meaningful reform of the international financial architecture are critical to building a more just and inclusive global system.


We are facing a debt crisis of development. For many developing countries, debt is no longer just a macroeconomic issue—it is a major obstacle to poverty reduction, climate action, and inclusive growth. In the Arab States, countries are navigating complex challenges: post-conflict recovery, energy transitions, youth unemployment, and climate shocks, while managing rising debt burdens. This is not just a technical issue. It is a structural crisis and a political test of our collective commitment to sustainability. Without urgent action, we risk entrenching a new era of divergence - within and across countries.


The numbers are stark:

  • Net interest payments as a share of government revenue in developing countries have more than doubled—from 4% in 2014 to 9.5% in 2025.
  • 56 countries spend over 10% of revenues on interest; 31 exceed 15%.
  • Among the 67 poorest nations, 11 are in debt distress; 24 are at high risk.
  • External debt service to government revenue has nearly tripled—from 4% in 2011 to 11%.
  • LDCs now spend nearly 15% of revenues on interest - well above the 9.5% average in other developing countries.


This burden is also impacting middle-income countries, forcing governments to cut back on critical investments in health, education, and social protection. This is not just a fiscal crisis—it’s becoming a full-blown development crisis.

Fiscal reform alone is not enough.
While fiscal discipline and reforms are essential, they are not viable in the short term for many countries grappling with weak growth, climate shocks, and humanitarian needs. Reforms—such as phasing out harmful subsidies or restructuring SOEs—must be paired with meaningful debt relief. Otherwise, we risk a “lost decade” for development.
Small steps won’t solve a big problem. 

There have been some positive developments—such as the G20’s Common Framework and the Global Sovereign Debt Roundtable—but progress is slow and insufficient. For countries in crisis, half-measures are no longer an option. 

We also need to address deeper structural inequities in the financial system that penalizes developing countries. UNDP’s work in Africa shows that subjective credit ratings—often based on opaque criteria—have cost African countries up to $74.5 billion in excess interest payments. That is money that could have financed hospitals, schools, and climate resilience. This is a clear call to reform sovereign credit assessments and lower unjust borrowing costs.


At the same time, we must scale innovative solutions that link debt to climate and development outcomes. Egypt’s recent debt-for-nature swap of EUR 54M, in partnership with Germany, is a compelling example of how debt instruments can be structured to both ease fiscal pressure and deliver environmental benefits. We must learn from and expand these models across the region.

UNDP proposes three immediate actions:

  1. Ambitious debt relief:
    All creditors—public and private—must provide meaningful relief for the 31 poorest, 
    high-risk countries to unlock fiscal space for development.
  2. A fair restructuring framework:
    “Extend and pretend” no longer works. A global debt architecture review is essential to 
    ensure timely, inclusive, and development-focused solutions.
  3. Lower borrowing costs:
    Expand access to affordable, long-term financing through MDBs, scale up grant-based 
    finance, and tailor instruments to country needs.

UNDP is committed to ensuring these solutions are prioritized in the implementation of Comprimso de Sevilla. Without them, millions will be forced to trade poverty reduction for interest payments.

Comprimso de Sevilla is a critical opportunity to act. Let us rise to it.


Thank you