FAO Statement at the 2025 ECOSOC Forum on Financing for Development, Ministerial fireside chat 1: Lowering borrowing costs and advancing development-oriented debt solutions

Low- and lower middle-income countries face the most acute challenges in terms of food insecurity, undernourishment and malnutrition, and suffer from protracted food crises. Their economies are highly dependent on agrifood systems and are vulnerable to the increased frequency and intensity of climate shocks and conflict. These countries also face the greatest restrictions when it comes to accessing quality financing, given their high levels of risk, debt, fiscal constraints and underdeveloped agribusiness sector. Public expenditure on agrifood systems in high-income and upper-middle-income countries is significantly higher and this makes them less vulnerable.

Debt swaps can be of critical assistance to low- and lower-middle-income countries, helping them to increase the sustainable and inclusive transformation of agrifood systems. These countries tend to register both a limited capacity to access financing and high levels of sovereign debt, which implies that a considerable share of their public revenue must be used to service payments on interest and principal. Debt swaps therefore provide governments with much needed fiscal space, allowing them to reallocate public resources towards crucial policies and programmes that can have more profound transformative effects on agrifood systems. Concessional loans and grants are also crucial to increase fiscal space and enable greater public expenditure to promote agrifood systems transformation, especially for LICs and LMICs.