In recent years, debt has been rising across the world and has reached worrying levels in a large number of low-income countries, which are most vulnerable to the damaging impact of debt crises. Finding ways to reduce the likelihood of debt crises in these countries should be at the top of policy-makers’ agenda at the national, regional and international level. This paper contributes to this policy discussion by providing an overview of the current debt situation, globally and in low-income countries, and setting out the imperative for action.

The paper offers a range of options that governments – both debtor and creditor – and international institutions and cooperation mechanisms could push forward in order to prevent future debt crises and to create a more stable future for low-income countries. The recommendations are grouped under four key issues that must be tackled:

• providing alternatives to borrowing
• better managing borrowing options 
• improving behaviour
• improving debt refinancing and restructuring.

This paper was commissioned to brief the Commonwealth senior-level meeting at the World Bank/International Monetary Fund (IMF) Annual Meetings in October 2019 and reflects evidence and research up to that date.