G20 commits to addressing developing countries' debt issues
The Group of 20 major economies, led this year by South Africa, stated on Thursday that the risk of a systemic debt crisis seems to be largely contained. However, many vulnerable low- and middle-income countries continue to face high financing costs and other challenges that hinder their ability to stimulate growth.
G20 finance officials issued a declaration on debt during the annual meetings of the International Monetary Fund and World Bank in Washington, calling for further work to boost debt sustainability, increase transparency and give borrowing countries more of a voice in the process, News.Az reports citing Reuters.
The leaders pledged to continue strengthening the G20 Common Framework for Debt Treatments in a "predictable, timely, orderly and coordinated manner," noting that several borrowing countries required "further international assistance."
That line came amid indications from senior IMF and World Bank officials that the emphasis was now on countries "growing their way out of debt" instead of holding out for debt relief.
The G20 declaration, its first separate communique on debt since the COVID-19 pandemic, was highly anticipated, amid huge cuts to development aid by the United States, which will take over the G20 presidency next year, and other rich countries.
But some debt relief activists said it fell short.
"Today’s G20 Ministerial Declaration on Debt Sustainability, led by the South African Presidency, is inadequate and unambitious – falling far short of what is needed to tackle the worst debt crisis the world has ever seen," said Iolanda Fresnillo with the European Network on Debt and Development.
She said the statement included no new initiatives and revealed the shortcomings of the G20 for addressing real crises.
Eric LeCompte, executive director of Jubilee USA Network, said unsustainable debt remained a G20 priority, noting that developing countries spent $921 billion on interest payments alone - not principal - in 2024, a 10% jump from 2023, with more increases expected this year.
"We see a consensus around the severity of debt payment challenges, but not yet a consensus on how to solve the debt challenges," he said. "Countries cannot borrow their way out of this crisis."
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