Women in developing countries hardest hit by rising debt burden, UN research finds

Women are hit hardest when the debt burden in developing countries rises, a trend expected to worsen as the war in the Middle East continues, UN research shows.

A report by experts from the UN Development Programme (UNDP), based on data from 85 countries gathered across three decades, shows women are disproportionately affected when debt repayments increase significantly.

As governments cut back public spending to accommodate rising debt costs, women, who are overrepresented in sectors such as education and care, are more likely to lose their jobs – and then to shoulder additional caring duties as the state retreats.

The UNDP’s administrator, Alexander De Croo, said the research underlined the importance for debtor countries of weighing the impact of potential spending cuts.

Even before the US-Israel war on Iran, he highlighted, 56 countries were spending more than 10% of government revenue on servicing their debts. The conflict is likely to exacerbate that situation as energy and fertiliser costs rise and global interest rates increase.

“In a moment like this, due to the instability in the world, but definitely induced by what is happening in the Gulf region, you see that governments are even more pressed to make choices,” he said.

“What we really want to point to in this report is that, look, when you make those choices as governments, please be careful: if you reduce your social spending, you should know that big chunk of social spending is going to women, and a bigger part of the employment that social spending is going to – it’s going to women.”

The report finds that, between the early 2010s and 2022, debt-servicing burdens in the 85 developing countries studied almost doubled. It estimates this led to the loss of 22 million women’s jobs in the short-term, and more than 38 million in the long term.

In general, moving from a moderate to a high debt-servicing burden – measured as a share of a country’s exports – causes on average a 17% decline in women’s income per capita, the report finds, while men’s income is unchanged. Life expectancy tends to decline for women and men.

Achieving gender equality is one of the UN’s 17 sustainable development goals. De Croo suggested creditor countries could consider linking debt relief to commitments to avoid spending cuts that disproportionately hit women.

“Helping women to have an income, to have a job, has a very high development outcome, and it actually has a higher development outcome than providing men with an income,” he said. “The countries providing loans can go into that logic and say: ‘Let’s have a discussion on making sure how you actually preserve your path towards prosperity and towards repaying those debts.’”

The research underlines the risks of the rising debt burden across the developing world as the conflict in the Middle East takes its toll.

Soaring prices for oil, gas and fertiliser are hitting, just as many countries have been affected by steep cuts in overseas aid – including by the UK.

The International Monetary Fund warned last month that developing countries are more exposed to rising interest rates and currency instability because of the growing status of private investors, such as hedge funds, as lenders.

The UNDP echoes that analysis, stressing the resulting currency volatility can worsen governments’ existing challenges with servicing their debt.

In the current crisis, the report warns: “As currencies weaken and inflation rises, the cost of servicing debt increases, precisely when governments face growing demands to shield households from rising food and energy prices.

“This creates a reinforcing cycle in which external shocks deepen debt vulnerabilities, further constraining fiscal space for social investment.”