The debt crisis of the countries of the Global South is exacerbated by the Iran war

The debt crisis in many countries of the Global South is sharply exacerbated against the backdrop of the Iran war, according to the 2026 debt report issued by the German “Erlas Jar.de” coalition, which calls for debt relief for debtor countries and is based in Dusseldorf, and the relief organization “Misireur”, which is based in the German city of Aachen.

According to the report, 44 countries currently suffer from a very high external debt burden. Another 25 countries are classified as high-burden countries, while another 15 countries face inherent risks. The war in Iran has contributed to worsening the situation, according to the report.

According to Meziroor, the situation is particularly difficult in Angola, where 60% of state revenues are allocated to pay interest and debt installments to foreign creditors. In Senegal, this percentage is 39%. For comparison, this percentage in Germany does not exceed about 2% of state revenues.

This leads to sectors such as education, health and infrastructure being deprived of the necessary funding, warned Malena Stutz of the Erlasyear.de coalition.

The crisis is becoming more severe due to the war in the Middle East, as high energy and food prices and rising borrowing costs increase pressure on public budgets. Benjamin Rosenthal, a development finance expert at Mezior, pointed to Lebanon, which has already entered a state of default, explaining that the population there is standing “literally in the face of nothingness” as a result of regional conflicts.

The report also criticizes the reduction in allocations for development cooperation, noting that private sector creditors impose very high interest rates, which increases the risk of prolonging crises and pushing countries toward greater dependence. The report indicated that previous debt restructuring operations, such as those that took place in Ghana or Sri Lanka, did not achieve sustainable burden relief.

In light of these developments, Miziroor calls for a radical restructuring of the international financial system. Rosenthal criticized that the necessary reforms are being obstructed so far by the countries of the Global North, including Germany, stressing that there is a need for binding mechanisms to write off debts and enhance the participation of affected countries in decision-making, calling on the German government to work in this direction.

Rosenthal said: “Fair and reliable debt relief is not an act of charity, but must become an essential part of international economic and financial cooperation, ensuring dignity, participation and development for all people.”