External Debt Vulnerability and National Crisis-Management Capacity in Developing Countries : The Transformation of UN Debt Governance and the Institutional Development of Borrower-Country Agency, 2020–2026

Abstract

External debt sustainability in developing countries concerns not only a country’s capacity to meet its debt obligations but also its ability to preserve the fiscal and institutional foundations required for sustainable development, essential public services, and crisis preparedness. This study examines six consecutive United Nations reports on External Debt Sustainability and Development issued between 2020 and 2025, together with related policy and institutional documents from 2025–2026. These materials are supplemented by official sources concerning creditor-led debt treatment, including the G20 Common Framework, the World Bank’s Debt Service Suspension Initiative, and the Debt Pause Clause Alliance. Using qualitative document analysis, the study compares changes in problem definitions, actor roles, policy instruments, and institutional status. The findings indicate a cumulative expansion, rather than a replacement, of conventional debt-sustainability concerns. Issues of liquidity and repayment capacity remain central, while increasing attention is given to multidimensional vulnerability, constraints on development investment, domestic debt-management capacity, and the participation of borrowing countries in international debt governance. The study therefore interprets recent changes not as the displacement of solvency analysis, but as an expansion of the criteria, policy instruments, and institutional spaces through which debt sustainability is addressed. The study further distinguishes domestic debt-management capacity from international borrower cooperation. The long-standing DMFAS programme supports debt recording, data validation, risk analysis, and the information base for public debt management, whereas the Borrowers’ Platform, launched in 2026, provides an emerging institutional space for peer learning, technical cooperation, and policy representation. Neither the operation of DMFAS nor the early institutional development of the Borrowers’ Platform should, however, be interpreted in itself as evidence of lower debt burdens or improved crisis-management outcomes. From a national crisis-management perspective, the article develops a conditional analytical pathway linking debt-service pressures to fiscal and development space, budgetary choices, the continuity of essential public functions, and crisis-response capacity. This pathway is explicitly treated as a testable proposition rather than an established causal effect. The study also situates external debt sustainability at the intersection of the Sustainable Development Goals (SDGs) and sovereign ESG. SDG 17.4 identifies long-term debt sustainability as an important means of implementation, while debt-related fiscal adjustment may affect climate and resilience investment (E), essential public services and social protection (S), and debt transparency, responsible borrowing, and institutional capacity (G). ESG is therefore employed as an auxiliary analytical perspective rather than as an official component of debt sustainability analysis or as a sovereign scoring framework. Because comparable country-level data remain insufficient to identify the full causal pathway from debt-service burdens to budget execution, service continuity, and crisis-management outcomes, and because the Borrowers’ Platform remains at an early stage of operation, this study does not estimate country-level causal effects. Instead, it formulates testable propositions and outlines a follow-up empirical framework linking debt-service burdens, external shocks, fiscal and institutional buffers, functional public expenditure, and service continuity. Its principal contribution lies in clarifying changes in UN debt governance and translating their national crisis-management implications into empirically falsifiable propositions for subsequent research.