This study investigated the crowding-out effects of sovereign debt accumulation and nominal exchange rate devaluation on infrastructure and educational investments in developing countries within the framework of the Debt Laffer Curve hypothesis. The study was motivated by the increasing debt burdens and persistent exchange rate instability experienced by many developing economies, which have significantly constrained fiscal space for productive public investment. Specifically, the study examined the nonlinear relationship between sovereign debt and public investment, identified the debt threshold at which crowding-out effects become significant, and analyzed how nominal exchange rate devaluation aggravates fiscal pressure on infrastructure and educational expenditure. The study employed panel data for 30 developing countries covering the period from 1995Q1 to 2025Q4. Utilizing a robust Dynamic Panel Threshold Regression framework complemented by a Split-Sample Two-Step System GMM estimator as a core robustness check, the empirical architecture explicitly evaluates the validity of an inverted U-shaped Debt Laffer Curve. The empirical results reveal a distinct, significant structural threshold at a public debt-to-GDP ratio of 62.14 percent. Below this critical tipping point, moderate sovereign borrowing exerts a positive and statistically significant influence on public capital expenditures, fostering essential physical infrastructure and human capital development. Nevertheless, once the 62.14 percent threshold is breached, further debt accumulation triggers a severe debt overhang effect, violently crowding out discretionary public investments. The inclusion of a multiplicative interaction term demonstrates that nominal exchange rate devaluations drastically exacerbate this crowding-out effect, serving as a destructive fiscal accelerator specifically within the high-debt regime where foreign-denominated obligations become unmanageable. Complementary panel variance decomposition results confirm that sovereign debt shocks explain approximately 42 percent of the long-term volatility in public investment, emphasizing the extreme sensitivity of national capital budgeting to uncoordinated fiscal shocks. Ultimately, the study concludes that shielding the public investment pipeline from the destabilizing feedback loops of debt overhang and currency depreciation is not merely a strategy for achieving short-term fiscal balance, but the fundamental basis for sustaining human capital development, infrastructural continuity, and generational economic growth. In effect, that long-term debt sustainability is a remarkable prerequisite for predictable public capital deployment, advocating for the institutionalization of rule-based fiscal anchors, aggressive domestic revenue mobilization, and advanced external currency risk mitigation strategies to insulate developing economies from catastrophic debt-servicing spirals.