Third World debt is killing children directly through the chains of economic dependence and austerity it creates
(The term “Third World debt” refers to the external debt that low- and middle-income countries owe to foreign lenders — such as international financial institutions (IMF, World Bank), foreign governments, and private creditors.)
It forces governments to choose between paying foreign creditors or feeding their people — and under the current global financial system, the children lose every time.
Third World debt robs poor countries of the means to keep them alive.
“Debt is not just numbers; it’s vaccines not bought, hospitals not built, teachers not paid.”
-UN Secretary-General António Guterres
- Pakistan (2023) spent $22 billion on external debt repayments, while half its children suffered from malnutrition.
- Zambia (2022) spent about $750 million servicing debt — more than it could spend on healthcare for its entire population.
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Sovereign (public) external debt → money borrowed by governments or guaranteed by them.
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Private external debt → loans owed by private companies to foreign entities.
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Sometimes, domestic (internal) debt is excluded — “Third World debt” generally means foreign obligations.
- After World War II, newly independent countries in Africa, Asia, and Latin America borrowed heavily to finance infrastructure and development.
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In the 1970s, banks in rich countries had excess “petrodollars” (oil revenues) and lent them to developing nations at low interest rates.
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When interest rates rose sharply in the 1980s, many poor nations couldn’t keep up — this triggered the 1980s debt crisis, starting with Mexico’s default in 1982.
- In 1980, developing countries owed roughly US $600 billion.
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By 2000, that had grown to US $2.5 trillion.
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In 2020, total external debt for low- and middle-income countries reached US $8.7 trillion (World Bank data).
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By 2024, it was estimated to be US $30 trillion+ if we include all developing and emerging markets (UNCTAD).
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Huge interest payments drain public budgets.
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Less money available for healthcare, education, and infrastructure.
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Countries must often accept austerity programs to qualify for loans or debt relief (IMF conditionality's).
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Persistent cycles of borrowing → repayment → new borrowing (the “debt trap”).
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Multilateral institutions: IMF, World Bank, African Development Bank, Asian Development Bank, etc.
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Bilateral creditors: Richer nations lending directly (e.g., China, U.S., Japan, France).
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Private creditors: Commercial banks, hedge funds, and bondholders.
Rapid growth of debt means more budgetary pressure for many developing countries (because they must service and repay the debt).
The rising debt levels are one factor undermining progress on development goals (health, education, infrastructure).
Slower growth of new debt does not necessarily mean reduction of burden — many countries still face high interest costs or unfavorable terms.
- Over 50 developing countries are in or near debt distress (IMF/UNCTAD).
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Interest payments for many nations now exceed spending on public health.
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Calls are growing for systemic reform, such as fairer lending terms, debt swaps (for climate action), or outright cancellation.
Debt drains money away from basic needs
- When a poor country owes billions in external debt, a huge share of its national budget goes to repaying interest and principal — often to wealthy countries, banks, or international institutions — instead of helping its people.
- Many developing nations spend more on debt service than on health and education combined.
- In 2024, over 50 low- and middle-income countries spent twice as much on debt payments as on healthcare.
When a country can’t pay its debts, the IMF (International Monetary Fund) often steps in with “bailout” loans.
But those loans come with conditions — known as Structural Adjustment Programs (SAPs) — that require:
- Cutting government spending (including health, food, and education budgets)
- Privatizing public services
- Removing subsidies on food and fuel
- Freezing public sector wages
These austerity measures are meant to “stabilize” the economy — but in practice, they often hit the poorest the hardest.
CONSEQUENCES
- Fewer public clinics, doctors, and vaccines.
- Rising food prices after subsidies are cut.
- Malnutrition, disease outbreaks, and child deaths increase.
- Education access drops, especially for girls.
Health systems collapse under debt burden
- Debt repayments mean underfunded hospitals, no medicine, and fewer staff.
- In Sub-Saharan Africa, debt servicing costs outstrip health budgets in over 30 countries.
- Many hospitals cannot afford basic antibiotics or electricity because foreign currency is used to pay debt, not import supplies.
- COVID-19 showed this brutally: countries like Ghana, Kenya, and Sri Lanka couldn’t afford pandemic response because of debt constraints.
- UNICEF estimates that over 200,000 children could die in the next few years in countries forced into austerity-driven debt repayments.
Debt fuels poverty and hunger
- High debt → less public investment → economic stagnation → poverty deepens.
- Poverty directly causes child malnutrition, stunting, and early death.
- In Malawi, debt repayments consume over 20% of government revenue — leaving only scraps for social welfare.
- In Haiti, over half of children are undernourished while the country continues to pay debts dating back to colonial “independence reparations”.
A VICIOUS CYCLE
- Country borrows to develop.
- Interest rates rise / global crisis hits → can’t repay.
- IMF steps in with new loans → austerity cuts → poverty worsens.
- Government borrows again to stabilize economy.
- Debt grows even larger.
Global system of inequality
- Rich countries profit from the interest payments of poor nations.
- Multinational corporations extract resources and wealth, while those same nations borrow to fund basic services.
- Every year, the Global South pays over $200 billion more to the North in debt service than it receives in aid.
What could stop this
- Debt cancellation for the poorest countries — immediately and unconditionally.
- Fairer global trade and tax systems to prevent re-indebting nations.
- End austerity conditionality's that harm the poor.
- Redirect debt payments toward child health, education, and nutrition.
- Transparency and accountability so debt isn’t stolen by corrupt elites.
The numbers given are real. The children behind them are real. These are not just statistics. They are human lives — and every number conceals an innocent child who could have lived, learnt, laughed and loved.
