Rising debt servicing crowds out social spending across Latin America and the Caribbean - ECLAC

Rising debt servicing crowds out social spending across Latin America and the Caribbean – ECLAC

Dec 17, 2025 News

(Kaieteur News) – High debt levels and rising financing costs are forcing governments across Latin America and the Caribbean to divert growing shares of public resources to interest payments, intensifying development pressures and squeezing spending on critical social services.

On Tuesday, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) delivered its flagship report, Preliminary Overview of the Economies of Latin America and the Caribbean. The report also projected economic growth for 2026. During the presentation, ECLAC’s Executive Secretary, José Manuel Salazar-Xirinachs, addressed the region’s mounting fiscal challenges.

“Central government interest payments as a share of expenditure on education, health and social protection, 2012 and 2023,” it was stated. According to ECLAC’s data, by 2023, central government interest payments in 23 countries in the region absorbed a larger share of expenditure relative to education, health, and social protection compared with a decade earlier.

Interest payments accounted for the equivalent of 70 per cent of education spending in 2023, up from 45 per cent in 2012. In relation to health, from 61 per cent in 2012 to 86 per cent in 2023, for social protection, interest payments increased from 52 per cent to 57 per cent.

Moreover, growth in Latin America and the Caribbean is expected to remain weak in 2026 amid continued global uncertainty. The region’s Gross Domestic Product is projected to expand by 2.4% in 2025 and 2.3% in 2026, marking consecutive years of growth hovering around 2.3%.

It should be noted that the Caribbean, excluding Guyana, is forecast to grow by 1.8% in 2026, slightly below the pace seen in 2025. This expansion will largely depend on trends in tourism and construction, leaving the subregion vulnerable due to its reliance on imported energy, high transport costs, and exposure to natural disasters. By contrast, Guyana’s economy continues to outperform, with real GDP growth projected at 24% in 2026 following 15.2% growth in 2025 and 43.6% in 2024.

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Debt, ECLAC, Latin America, public resources

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