Abu Dhabi:Rising borrowing costs are exerting pressure on the public finances of developing countries, restricting their ability to allocate resources for health, education, and other development priorities.

According to Emirates News Agency, UN Trade and Development (UNCTAD) has warned in its latest 'World of debt' publication that the servicing of external debt is now surpassing new inflows in many developing countries, indicating a broader shift in the role of debt.

The UNCTAD report reveals that global public debt reached $111 trillion in 2025, up from $49 trillion in 2010. Although developed economies hold more than two-thirds of this total, debt has risen much more quickly in developing countries, where borrowing costs remain significantly higher.

Developing countries paid an average interest rate of 5.2% on public debt, compared to 2.2% in developed countries. Consequently, interest payments in these nations surged from $363 billion in 2010 to nearly $1 trillion in 2025, affecting governments' ability to invest in essential public services.

In 51 developing countries, home to 3.7 billion people, interest payments on public debt outstripped government spending on health or education. The UNCTAD report suggests that closing the borrowing-cost gap could yield substantial benefits.

If developing countries could secure borrowing rates similar to those of developed economies, they could potentially save around $500 billion annually in interest payments. This amount could fund approximately 1.3 million primary healthcare centers or provide a basic diverse diet for about 1.6 billion children each year.