The Global South is being forced to choose creditors over children

The world claims to regard education as a universal right. Its financial system tells a different story.

⁠New figures released by UNESCO show that 113 countries with a total population of 6.1 billion now spend more on servicing debt than educating their people. In low-income countries, debt payments are nearly four times education expenditure. In 18 of the most heavily indebted countries, governments spend at least five times more on debt than on education.

These are not merely signs of strained public finances. They reveal a stark political hierarchy.

Creditors possess enforceable claims on government revenues. Children possess declarations, development goals and promises. When the two collide, creditors are paid first.

The consequences are visible in overcrowded classrooms, deteriorating school buildings, teacher shortages, unaffordable school fees and children leaving education prematurely. Yet these outcomes are generally described as funding gaps or failures of domestic governance, as though governments had freely decided to neglect their schools.

In reality, many governments are operating inside an international financial order that sharply restricts what they can choose.

The ⁠World Bank reports that developing countries transferred $741bn more to external creditors in principal and interest between 2022 and 2024 than they received in new financing. This was the largest net debt outflow in at least 50 years. In 2024 alone, low and middle-income countries paid a record $415bn in interest.

In other words, the financial flows are frequently moving in the opposite direction from the one suggested by the language of development assistance.

Poorer countries are commonly portrayed as beneficiaries of Western generosity. But vast amounts of public wealth are travelling from debtor countries to bondholders, commercial banks, multilateral institutions and wealthier creditor governments.

Money that could hire teachers, provide school meals or build classrooms is instead leaving the country.

This is particularly perverse because education is not simply another item of government consumption. It is an investment in a society’s future capacities. Cutting it may make debt payments easier today, but it will weaken productivity, public revenues and social resilience tomorrow.

Debt contracts are treated as binding obligations whose breach can trigger credit downgrades, capital flight, lawsuits and exclusion from financial markets. The right to education, by contrast, carries no comparable machinery of enforcement.

No ratings agency downgrades creditors when a country cannot afford enough teachers. No financial penalty is imposed on bondholders when debt service forces children out of school. Markets do not panic when classrooms collapse.

The system disciplines governments for failing creditors, not for failing children.

UNESCO has proposed expanding debt-for-education swaps. Under these arrangements, a creditor cancels or restructures part of a country’s debt in exchange for government investment in agreed educational programmes.

Such initiatives can produce tangible gains. A 2023 agreement with France helped Ivory Coast finance more than 30 schools in underserved areas. A German agreement with Egypt supported school feeding and basic services, while an earlier Spain-Peru programme funded education projects across vulnerable regions.

These programmes are worthwhile. But they are not a solution to the larger debt crisis.

Debt swaps typically cover only a small fraction of what countries owe. They are negotiated selectively, depend on creditor consent and may add new layers of external monitoring to domestic spending. Most importantly, they leave untouched the principle that creditors are entitled to repayment unless they voluntarily concede otherwise.

The question becomes how to persuade creditors to permit a little more education, rather than why the claims of creditors should take priority in the first place.

That question is especially urgent because education aid is also falling. UNESCO projects that international assistance for education could decline by as much as 30 percent between 2023 and 2027.

Debtor countries are therefore being squeezed from both sides: aid is retreating while debt payments continue.

The familiar recommendation that developing countries should mobilise more domestic resources is inadequate. Progressive taxation and reduced corruption matter. But additional revenues will not transform education systems if they are immediately diverted towards debts contracted at high interest rates, or made more expensive by currency depreciation.

Nor can the problem be solved by demanding ever more austerity. Education budgets consist largely of recurring expenditure, especially teachers’ salaries. When governments are instructed to freeze public-sector wage bills, they cannot solve teacher shortages or expand access, however often international institutions proclaim education a priority.

A more serious response would begin with large-scale debt cancellation for countries in distress, automatic suspension of payments during economic and climate emergencies, far cheaper concessional financing and a fair multilateral mechanism for restructuring sovereign debt.

At present, debt negotiations are fragmented among private creditors, bilateral lenders and international institutions. Debtor governments must bargain with powerful financial actors while trying to avoid being punished for seeking relief.

A binding United Nations framework for sovereign debt could establish shared rules, require both borrowers and lenders to act responsibly and prevent holdout creditors from obstructing restructuring. It could also make social rights central to assessments of what a country can genuinely afford to repay.

The world needs to move towards the idea that debt repayment cannot come at any human cost. A debt is not sustainable when paying it requires dismantling the institutions on which a society’s future depends.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.