Despite the best efforts of governments, the world has not yet managed to dodge another systemic financial meltdown. But even if it does not reach that point, many low-income countries are trapped in a doom loop. To service their debt, they are reducing investment in essential areas such as health care, education and infrastructure. This limits future growth, weakens competitiveness and makes it harder to get out of recession.

The huge debt payments that low-income countries have to make to rich creditors and multilateral institutions like the IMF and the World Bank are taking resources away from investments that benefit poor people and contribute to social and economic development. In the past, these repayments have meant hospitals without drugs or trained staff and schools with fewer books and materials. They have also prevented poor countries from tackling climate change and delivering on the Sustainable Development Goals (SDGs).

When central banks raise interest rates to combat inflation, they increase the cost of borrowing for both governments and businesses. This can lead to unsustainable levels of debt, forcing governments to prioritise debt repayment over investment in education, healthcare and infrastructure – and slowing the economic growth they need to generate tax revenues to pay their debts.

It’s important to remember that while the global debt crisis is a recent phenomenon, it was exacerbated by decades of policies that prioritised speculative and short-term capital flows over investing in public services and long-term prosperity. To help prevent a similar crisis in the future, we need to build a global framework that ensures fair and sustainable debt treatment for all. This is why PIH, in the spirit of our late Co-Founder Paul Farmer, is committed to campaigning for a universal, binding debt relief treaty.