// EQUALITY: DEVELOPMENT AND DEBT RELIEF
From South Africa to the United States: How two G20s can address the issues of debt and fiscal stress constraining global growth
The G20 must build consensus to restore fiscal balance, unlock investment and reignite sustainable global growth to help low- and middle-income countries escape debt trap cycles
D espite a generation of relief initiatives, persistent debt distress in low- and mid- dle-income countries must be a cause for concern for all. Either the world now has a stubborn illness or the cure has not worked effi- ciently. There is a third possibility: the care givers themselves are down with the flu. South Africa’s G20 presidency has provided a platform to discuss this issue, with South Africa provid- ing a bridge between the developing countries and the G7 and G20. In all these settings, at least a third of the countries suffer from some form of fiscal stress. Can South Africa’s G20 find consensus on a way forward? The scale of the debt crisis problem is stag- gering: developing countries paid a record $1.4 trillion to service their foreign debt in 2023, with interest payments surging to $406 bil- lion – a 20-year high nearly a third more than the previous year. The Jubilee Report, the
United Nations Secretary General’s report for the International Conference on Financing for Development in Seville and the Healthy Debt for a Healthy Planet report all offer suggestions for tackling the debt crisis sustainably. The big- gest impediment is the pace of implementation and the compounding challenges facing coun- tries. Slow implementation of the G20 Common Framework for Debt Treatments has dis- couraged many countries from restructuring their debt. Without fiscal space for long-term productive investments, they are stuck in a low- growth, high-debt equilibrium state. Collectively these reports call for:
Vera Songwe, chair, Liquidity and Sustainability Facility
•
Mainstreaming nature and climate into macroeconomic and fiscal analysis; Reducing debt pressures to enable nature- and climate-related investment;
•
60 // G20 SOUTH AFRICA: THE JOHANNESBURG SUMMIT 2025
Made with FlippingBook - PDF hosting