Ever wondered why some countries struggle to feed their people while others rake in billions? Sri Lanka’s unfolding economic crisis reveals a stark truth about global debt. It’s not just about numbers; it’s about lives, health, and education. Discover how the Global South is fighting back against an unjust financial system. Will this urgent call for economic justice be heard?
The Global South debt crisis is reaching a critical juncture, with countries like Sri Lanka serving as stark examples of how systemic financial imbalances are eroding national sovereignty and basic human rights. Across Africa, Asia, and Latin America, developing nations are grappling with unsustainable debt burdens that divert essential resources away from public services and towards creditor repayments, exacerbating socio-economic vulnerabilities.
Sri Lanka’s recent economic travails illustrate this precarious situation vividly. In 2023, the Wickremesinghe administration secured a $3 billion support package from the International Monetary Fund (IMF) under its New Extended Fund Facility arrangement. This crucial IMF bailout was contingent on reaching a comprehensive debt restructuring agreement with key creditors, including China, India, and Japan, a deal that was finalized later the same year to unlock further aid tranches.
Despite these high-level negotiations, the impact on the ground for the Sri Lanka economy remains challenging. Newly elected President Anura Dissanayake’s directive to reinstate agricultural and fishing subsidies, while a welcome measure, faces an uphill battle. Fishermen, for instance, continue to report prohibitively high fuel costs, severely impacting their livelihoods and demonstrating the persistent struggle against economic hardship.
The fiscal constraints imposed by this pervasive debt are particularly evident in the allocation of public funds. Sri Lanka’s 2025 public health budget accounts for a mere 1.5 percent of its gross domestic product – a shocking five times smaller than the amount earmarked solely for servicing the interest on public debt. This stark disparity underscores how the Global South debt crisis directly undermines fundamental social spending, imperiling the well-being of millions.
This is not an isolated phenomenon but rather a systemic issue draining public finances across numerous developing nations finance sectors. A recent United Nations Conference on Trade and Development (UNCTAD) report painted a grim picture, revealing that approximately 3.3 billion people – half the world’s population – reside in countries that allocate more funds to interest payments than to vital health or education services. In 2024 alone, developing countries collectively paid an astonishing $921 billion in interest, with African nations bearing a disproportionate share of this burden.
UNCTAD further warns that escalating global interest rates and a fundamentally inequitable financial architecture are perpetuating a cycle of dependency and underdevelopment. Developing countries are routinely subjected to interest rates several times higher than those imposed on wealthier nations, yet existing debt relief mechanisms remain woefully inadequate. These mechanisms are often ad hoc, fragmented, and overwhelmingly biased in favour of creditors, intensifying the urgent global demand for a permanent and transparent debt resolution framework centered on economic justice, development, and national sovereignty.
In a significant move to address these systemic issues, over 500 delegates from around the globe are set to convene in Kandy, Sri Lanka, in September for the 3rd Nyeleni Global Forum for food sovereignty. This vital gathering will unite small-scale food producers, Indigenous peoples, trade unions, researchers, and progressive policy think tanks. A central theme will be the profound impact of the global debt crisis on fundamental rights to food, education, health, and land.
The forum aims to forge crucial links between localized struggles – such as farmers resisting land grabs or workers organizing for living wages – and broader global campaigns demanding comprehensive debt cancellation, climate reparations, and a fundamental transformation of the international financial system. This interconnected approach seeks to empower communities and advocate for macro-level policy changes that foster genuine equity.
For those in the Global South, it is unequivocally clear that a just and sustainable recovery cannot be predicated solely on rigid fiscal targets and compliance checklists. Instead, a paradigm shift is urgently required, one that champions the reclaiming of public spaces for investment in social goods, the democratisation of debt governance, and the unwavering prioritisation of people’s dignity and well-being above narrow creditor profit margins. This comprehensive restructuring represents the most urgent and necessary transformation for Sri Lanka and countless other nations striving for true self-determination.
