Developing countries need stronger financial safety nets and better access to affordable, predictable, long-term financing to work through their debt and development financing gaps, Penelope Hawkins, Head of the Debt and Development Finance Branch at UN Trade and Development (UNCTAD), has said, NewsFirst reported.
“It is clear that developing countries require stronger financial safety nets and they also need greater access to concessional and predictable long-term finance,” she said.
The ‘sovereignty premium’
Hawkins’s most concrete point concerned what borrowing at home actually costs. Governments that shift from foreign to domestic financing typically pay interest rates two to three percentage points higher than they would externally — a gap she called a “sovereignty premium.”
“We know that countries can shift from foreign finance to domestic finance, but we do know that that comes at an additional cost,” she said.
The premium is not a reward for borrowing locally, in other words, but a charge. Hawkins attributed it to the way global risk pricing feeds into domestic markets: “Why is that? Because the international determinants of risk pricing also influence domestic markets.”
She cited cases of governments going to their domestic banking markets daily to raise funds, at borrowing costs above 20 per cent.
What peer learning changed
Hawkins pointed to a recent peer-learning exercise held in the Maldives, where participating countries found that their difficulties in debt management and domestic resource mobilisation were largely shared rather than country-specific.
The practical outcome she described was a shift in maturity structure — raising funds across tenors ranging from three months to ten years instead of rolling over short-dated paper, easing refinancing pressure and making budget planning more predictable.
She also argued that national development banks, regional development banks and the international financial system need to work in coordinated fashion, and that responsibility for closing financing gaps rests with national governments and the international community together.
The platform she is pointing to
Hawkins encouraged developing countries to join international borrower platforms. UNCTAD serves as Secretariat of the first such body: the Borrowers’ Platform, launched on 15 April at the IMF-World Bank Spring Meetings with representatives of 30 countries present. The Maldives — where the peer-learning exercise was held — sits on the working group steering its implementation through to the IMF-World Bank Annual Meetings in October 2026, now a month away.
The scale behind the argument was set out at that launch: external debt across developing economies reached US$11.7 trillion in 2024 against annual debt service of roughly US$920 billion, with 54 countries spending more on servicing debt than on health or education. The Group of Twenty-Four separately put developing countries’ 2024 debt servicing at US$163 billion against US$47 billion received in development assistance — a net outflow.
Not reported
NewsFirst did not say where or when Hawkins was speaking, or to what forum — the report carries no venue, event or date for her remarks. It did not name the countries borrowing above 20 per cent, say when the Maldives exercise was held or which states took part, or indicate whether Sri Lanka participated. NewsFirst’s own photo caption describes Hawkins as Officer-in-Charge of the branch while its text calls her Head; the report does not reconcile the two. No other verified newsroom had carried her remarks at the time of writing.
