Women in developing countries hit hardest by rising debt burden

UNDP head Alexander De Croo stressed that it is important for countries to take into account the consequences of cutting social spending. Even before the escalation of the situation in the Middle East, dozens of states were already directing more than 10% of their income to pay off debts. Rising energy prices, fertilizer prices and rising interest rates are likely to further complicate matters. According to De Croo, cuts to social programs are particularly painful for women, since much of the costs are related to their employment and support.

From the beginning of the 2010s to 2022, the debt burden in the countries in question almost doubled. This is estimated to have resulted in a loss of about 22 million jobs for women in the short term and more than 38 million in the long term. In addition, the transition to high levels of debt leads to an average decline in women’s per capita income by 17%, while men’s income remains roughly the same. At the same time, life expectancy is also decreasing for both women and men.

Gender equality is one of the UN’s key sustainable development goals. In this regard, De Croo suggested that creditor countries consider writing off debts, provided that borrowers do not cut back on spending, which is especially important for women. He also noted that supporting women’s employment and income has a high economic impact and can contribute to more sustainable development and debt repayment.

The report highlights that the current crisis is being worsened by rising prices for oil, gas and fertilizers, as well as cuts in international aid. The International Monetary Fund has previously warned that developing countries are becoming more vulnerable due to rising interest rates and currency instability, fueled by the growing role of private lenders, including hedge funds. According to the UNDP, currency fluctuations further complicate debt servicing. The weakening of national currencies and rising inflation are increasing the cost of payments at a time when states need to support the population against the backdrop of rising prices for food and energy. The result is a vicious circle: external economic shocks increase the debt burden, and this, in turn, limits the ability of countries to invest in the social sphere.