Debt burden threatens health spending in developing countries, AHF warns

Dar es Salaam. Rising public debt is increasingly constraining governments’ ability to finance healthcare and other essential social services, with developing countries facing difficult choices between meeting debt obligations and investing in the wellbeing of their populations.

The AIDS Healthcare Foundation (AHF), which launched its Freedom from Debt Campaign in June 2026 across 50 countries, says the shrinking fiscal space created by debt servicing is undermining efforts to strengthen health systems, sustain HIV programmes and expand access to essential services.

According to figures cited by the campaign, developing countries paid $921 billion in net interest on public debt in 2024, an increase of 10 percent from the previous year.

It also says 61 developing countries allocated at least 10 percent of government revenue to interest payments, while poorer nations face substantially higher borrowing costs than wealthy economies.

The associate director, AHF global public health institute Diana Tibesigwa described public debt as a major constraint on sustainable development, saying governments struggling to repay loans have less room to fund social sectors.

“Public debt has emerged as one of the world’s greatest limitations to sustainable development across Africa and globally,” the official said. “As governments grapple to pay back this debt, there is shrinking space, or fiscal space, for social sectors and protection sectors like health and education.”

The organisation says the consequences extend beyond government balance sheets.

Across many low- and middle-income countries, resources that could otherwise strengthen health systems, improve HIV responses and expand access to essential services are being diverted towards debt obligations, according to AHF.

For Dr Peninnah Iutung, AHF’s Executive Vice President for Global Programmes and one of the campaign’s leading advocates, the issue is particularly important because of the organisation’s experience in delivering healthcare in countries where public systems face significant resource constraints.

AHF operates in 50 countries and provides HIV care and treatment to more than three million people, largely in collaboration with governments and other partners.

“One of the reasons we’ve thrived in the HIV and AIDS field is because advocacy was very key to ensuring that care and treatment was made available right from the beginning,” Dr Iutung said.

She said AHF’s advocacy has increasingly expanded beyond HIV and AIDS to broader public health concerns, drawing on lessons from the fight against infectious diseases, the Ebola outbreaks and the Covid-19 pandemic.

The organisation argues that changes in global financing are making the challenge more urgent. Dr Iutung said official development assistance from the Global North has retreated in recent years, leaving countries in the Global South increasingly responsible for financing their own health priorities.

“At this point in time … the Global South more and more has to depend on itself to finance their health agenda,” she said.

But she cautioned that countries cannot sustainably take on that responsibility if large portions of their public resources are committed to debt repayment.

AHF’s campaign cites an estimate that debt servicing can consume a substantial share of government resources in some countries, leaving less money for infrastructure and essential services.

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“That means very little money is left behind to support the infrastructure needs, to support the social needs like health and education,” Dr Iutung said. “We cannot talk about being developed, we cannot grow and cannot develop all the countries in the Global South for as long as this sovereign debt remains a key issue that stands as a barrier to our development.”

Seeking a collective voice

AHF is calling for reforms to the international financial system, with one of its central proposals being the creation of a borrowers’ forum through which developing countries could negotiate collectively with creditors.

Dr Iutung said individual countries often have limited negotiating leverage when seeking financing, while collective action could give developing nations greater influence over borrowing terms.

“With a borrowers’ forum, the opportunity will be that countries can learn from each other — how to negotiate better, but also not just to negotiate better as individuals, but we could negotiate collectively as a bloc,” she said.

AHF also wants countries facing major health emergencies, epidemics or other severe shocks to have mechanisms allowing temporary pauses in debt repayments so they can direct resources towards responding to crises and economic recovery.

The organisation points to the Covid-19 pandemic as an example of how major health emergencies can severely disrupt economies, with some countries still struggling to recover.

Another proposal is a one percent tax on the artificial intelligence industry, with AHF arguing that revenues from the rapidly expanding sector could contribute to debt relief and development financing.

Representation in global institutions

Dr Iutung also argues that developing countries need greater representation in institutions responsible for shaping global financial policies, including the International Monetary Fund and World Bank.

“Africa right now, the representation of African countries is only 6 percent,” she said, arguing that greater representation would allow borrowers to have a stronger voice in decisions affecting them.

“Because also the reality is most of the resources come down to Africa and the other developing countries. So we are the borrowers. So why don’t we have a say over some of the policies that directly affect us?”

AHF is also calling for a review of international lending frameworks and greater efforts by African countries to extract more value from their natural resources.

Dr Iutung said African governments should strengthen domestic industries so that more raw materials are processed locally into finished products, generating greater value and strengthening countries’ ability to finance their own development.

She said regional institutions, particularly the African Union, could play a greater role in coordinating African positions and strengthening cooperation with other Global South countries.

Health cannot be separated from global economics

For AHF, the debt debate is ultimately a public health issue.

Dr Iutung said the Covid-19 pandemic demonstrated that countries cannot isolate themselves from global health threats, regardless of their economic strength or geographical borders.

“We cannot live in a bubble in this world,” she said. “One of the things, especially on the health side, that has shown us that we cannot live in a bubble, we saw that with Covid.”

The Freedom from Debt Campaign is therefore intended to generate wider debate around how international financial arrangements affect health, development and inequality.

“This is an opportunity,” Dr Iutung said. “AHF is galvanizing this campaign to spark a discussion, to spark more interest, to spark participation in decisions around how the Global South continues to rise and develop.”

For the organisation, the central argument is that sustainable healthcare financing cannot be separated from the wider economic conditions under which governments operate.

“Our message is that right now the system is inequitable. It’s unfair to the Global South,” Dr Iutung said, calling for a fairer international system that allows developing countries to pursue growth while strengthening the services their populations depend on.

As countries across Africa continue to balance debt obligations with demands for healthcare, education and infrastructure, the debate over how development is financed is increasingly becoming a debate over how governments can protect and improve the lives of their citizens.