Why we must rethink country debt to protect education and unlock long-term development

In 2024 the 10 countries facing the worst barriers to girls' education spent on average four times more on debt servicing than on education, according to Malala Fund's analysis comparing girls' education indicators with debt data produced by Development Finance International. This isn’t just unjust. It’s unsustainable. Unless the international community changes course, it will undermine global progress on gender equality, development and economic resilience in the coming years.

Across low- and lower middle-income countries, governments are under pressure to meet growing debt obligations — often while contending with climate shocks, conflict, rising poverty and inflation. In this environment, education budgets shrink. Classrooms close. School meals disappear. Teachers leave. Mental health support vanishes. Far from being sanctuaries of learning, schools remain rundown and unsafe for girls.

These are the real-world impacts of a global financial system that is failing the next generation — especially girls.

Progress in meeting the United Nations Sustainable Development Goals, including the target of universal secondary education by 2030, is off track. Globally, more than 122 million girls are out of school — most of them adolescents in low- and lower-middle-income countries. In sub-Saharan Africa, the number of out-of-school girls is growing. Millions cannot claim their right to secondary education not because of a lack of ambition, but because of political and financial decisions beyond their control.

Debt is at the centre of this crisis. Development Finance International finds that, as of June 2024, in over 30% of developing countries for which data is available, debt consumed more resources than education, health, climate and social protection combined. Partly as a result, public investment in education is well below the globally agreed targets of 20% of national budgets or 6% of GDP. In too many countries, education budgets are half that and falling.

Debt burdens also lead to austerity conditions. As part of International Monetary Fund (IMF) loan agreements, countries often adopt spending caps, public sector wage freezes and regressive tax increases. The repercussions tend to fall hardest on women and girls — eroding their access to schools, nutrition programmes and health services.

Girls face unique consequences when education and supportive systems are underfunded. Without school feeding programmes, they go hungry because families use their limited resources to feed men and boys first. Without affordable menstrual products or access to clean, safe toilets at school, many are forced to stay home during their periods. When girls do go to school, long, unsafe commutes increase their risk of experiencing harassment and violence. And, in times of economic stress, families often prioritize paying for boys' schooling costs over girls.

Last year, Malala Fund asked over 800 girls across 30 countries what they want for their education. Their message was clear: they want schooling that is safe, inclusive and empowering. They need financial support for school-related costs, safe transportation and routes to school, teachers who understand their lives, access to menstrual health support and curricula and digital learning resources that prepare them for leadership and real-world challenges.

These aren’t luxuries. They are the minimum necessities for learning. When crushing debt forces countries to prioritize repayments over vital social services, girls’ needs are among the first to be sacrificed.

The consequences of underinvestment in education and other social sectors begin early and compound over time. In childhood, girls lose access to school meals and early learning opportunities. In adolescence, household financial stress leads to higher dropout rates and early marriage. In adulthood, women are more likely to be stuck in informal, low-wage jobs with limited protections, especially if they haven’t completed their education – or unpaid care burdens push them out of the workforce entirely. This cycle is a product of global choices — and it can be broken.

In the late 1990s, the Heavily Indebted Poor Countries (HIPC) Initiative cancelled $100 billion in debt for the world’s lowest-income countries, with transformative results for education. Between 1990-2015, participating countries saw a 21.7% rise in gross primary enrolment, an 8.7% improvement in the female-to-male enrolment ratio and a 13.7% increase in primary completion rates.

However, the only coordinated global mechanism for restructuring debt today — the G20 Common Framework for Debt Treatments — is not delivering the same gains. It is slow, opaque and unable to compel participation from private creditors, who now hold a growing share of sovereign debt. Worse, the framework is gender-blind: current debt sustainability assessments fail to account for a country’s ability to invest in education, health care and gender equality.

To unlock sufficient resources for girls’ education, policymakers must redesign the global debt system to serve people — not creditors. Malala Fund’s new policy brief outlines five reforms to the G20 Common Framework that would help shift this balance:

Restructuring must bring debt repayments down to no more than 10–15% of national revenues to allow for social investment.

Financial indicators must be expanded to include a country’s ability to deliver on education, health and gender-responsive services.

Restructuring deals should require minimum thresholds for social investment, especially in services that benefit girls.

Countries must be allowed to pause repayments to public and private creditors, while restructuring decisions are underway.

The Common Framework must include binding commitments and clear relief targets, so governments can plan effectively.

Investing in girls’ education is one of the most proven, cost-effective interventions for development. When girls complete secondary school, they delay marriage, have healthier children, participate more fully in the economy and strengthen democratic institutions. They are more likely to lead, innovate and hold decision-makers accountable.

A 2018 World Bank report found that if every girl worldwide received 12 years of quality education, women’s lifetime productivity and earnings could add $15-30 trillion annually to the global economy. By allowing debt to spiral out of control in lower-income countries, the world risks locking out one in seven school-age girls from reaching their full potential — not because the resources don’t exist, but because the global financial rules don’t serve them.

The choice ahead isn’t only economic. It’s moral, political and strategic. Will we continue forcing countries to choose between paying their creditors and investing in their children — or will we build a financial system that puts human development first?