Among the challenges facing developing countries, none is arguably more crucial than the significantly deteriorated fiscal situation that threatens to erase several years of progress on development agendas. According to some estimates, almost 60 percent of the poorest countries are either in or at high risk of debt distress, nearly doubling since 2015 (Figure 1; World Bank 2022a). Total debt service payments on public and publicly guaranteed (PPG) external debt of the poorest countries rose to over $50 billions in 2021, with repayments now representing 11.3 percent of government revenue in the poorest countries, up from 5.1 percent in 2010 (Figure 2). In most developing countries, the cost of servicing external debt now exceeds expenditures on health, education, and social protection combined (UNICEF, 2021). The current global environment characterized by higher global interest rates and exchange rate depreciations against major currencies is adding to the fiscal challenge by raising the cost of external financing and debt service […]