Top Highlights

• a financing divide is sharply curtailing the ability of many developing countries to respond to shocks and invest in recovery.
• At the beginning of 2022, 3 in 5 of the poorest countries were at high risk of or already in debt distress, and 1 in 4 middle-income countries were at high risk of fiscal crisis
• Even in countries where debt is considered sustainable, the high cost of borrowing precludes needed investment.
• On the right terms, debt financing can enable countries to respond to emergencies and fund long-term investments. Productive investments in turn enhance growth and fiscal capacity, thus generating the resources to service debt sustainably. On the other hand, for countries with large debt overhangs, additional lending can be counterproductive, and d...
• Linking public investment decisions to a medium-term fiscal and budget framework and debt management strategy—for example, in the context of an integrated national financing framework—can reduce the volatility of financing for capital expenditure.

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