The funding crisis and underinvestment in children.

Too many governments face a difficult challenge: how to invest adequately in children when funding is scarce. Forty-five of the world’s developing countries now pay more in debt interest than they spend on health, and 22 spend more on interest than education. If this trend continues, we risk creating an indebted generation – a cohort of children whose futures are compromised as countries struggle to service debt incurred before they were born.

At the same time, unprecedented cuts in development aid could result in the deaths of at least 4.5 million children under age 5 by 2030. Funding cuts directly impact life-saving programmes, forcing the delay or suspension of critical supports in education, health, and protection for children caught in crises.

Traditional solutions, like austerity or borrowing from new sources, risk deepening the crisis. Instead, debt restructuring can align the incentives of lenders and borrowing governments to transform obligations into opportunities. In such arrangements, creditors receive predictable returns while governments are incentivized to make robust, sustainable investments that improve children’s lives.

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