YAOUNDE, Cameroon / BARCELONA, Spain, Nov 24 (IPS) – When South Africa took over the G20 presidency, debt sustainability was the focus, with a promise to launch a cost of capital commission. Many hoped that the G20, with an African country at the helm, would finally provide real solutions to the debt crisis gripping the South – and especially Africa.
A year later, the South African presidency came to an end, and nothing has fundamentally changed. The G20 has failed again and it is time to look for real solutions elsewhere.
The African debt crisis is deepening
Alarm bells have been ringing for years. Africa’s total debt burden has more than doubled since 2021 to reach $685.5 billion in 2023, partly due to the economic fallout from the Covid-19 pandemic, with rising capital costs pushing debt payments to record highs.
The African Leaders Debt Relief Initiative (ALDRI), led by eight former heads of state, is demanding urgent debt relief, not as ‘charity’ but as ‘an investment in a prosperous, stable and sustainable future – for Africa and the global economy’.
While the South African presidency raised hopes for a change towards real solutions by putting the African debt crisis at the center of the G20 agenda, the outcome leaned more towards rhetoric than action.
The G20 has failed
If we want to find fair solutions to the growing debt problems facing African and other global South countries, we can no longer expect forums like the G20 to deliver. They are dominated by creditors who are unlikely to reform a system that serves their own interests.
After four meetings of finance ministers and central bank governors of the G20 financial leaders, South Africa issued a debt declaration in October. But it contained nothing new and produced no actionable commitments on what the G20 will do to solve the debt problem.
Nothing was achieved at the G20 leaders’ summit in Johannesburg last weekend either. No reform. No changes. Just a few reports, but no decisions at all. As the debt crisis worsens, the G20 remains paralyzed, unable to agree even on minimal reforms to its own common framework.
This paralysis is structural. Although the G20 tries to give the impression that it is inclusive, the problem with the G20 is that it is not a truly multilateral and democratic institution, but an informal exclusive forum for dialogue between competing powers.
Geopolitical tensions, and especially the American context, take the paralysis to another level. Because decisions are made by consensus, the result is always the lowest common denominator.
The failure of the common framework
Launched in late 2020, the G20 Common Framework aimed to enable faster and fairer debt restructuring for low-income countries. Yet it is still very inefficient. Restructuring processes are slow, debt reductions are too superficial and the division of responsibility between public and private creditors is very unequal, as we have seen in Zambia.
Calls for reform of the Common Framework have been repeated by many governments and institutions, but the G20 has been unable to deliver. For example, the African Union called for reforms including introducing a time-bound aspect, establishing a universally accepted methodology for comparability of treatments, suspending debt payments throughout the debt restructuring process, expanding eligibility criteria and establishing a legal mechanism to enforce compliance with restructuring agreements.
Yet it still appears that the G20 is not concerned with acting in the interests of the people. Instead, it continues to perpetuate the interests of creditors.
There is a better path: the United Nations
Fortunately, there is another path that provides the much-needed inclusive and democratic multilateral institutional framework to advance the necessary reforms.
In July, UN member states worldwide agreed by consensus to launch an intergovernmental process to address gaps in the debt architecture. This process should lead to a UN Framework Convention on Sovereign Debt, as supported by the African Union in the Lomé Declaration on a Common Position on Africa’s Debt Burden, and to the establishment of a multilateral mechanism for sovereign debt resolution, long requested by the G77 countries.
The same UN forum agreed to establish a borrower platform, which will “provide countries with debt problems a way to coordinate their action and strengthen their voice in the global financial system.”
This is not radical. As Ahunna Eziakonwa, director of the United Nations Development Program (UNDP) Regional Office for Africa, recently said, it is a “common sense process that is long overdue.”
Yet some creditor countries, including the European Union, are trying to derail the UN process, claiming it would duplicate the G20’s efforts. Choosing a status quo that clearly does not work is a political choice that condemns Africa and other countries in the Global South to greater poverty, inequality and climate destruction.
If rich countries are serious about supporting Africa and the countries of the world south to tackle the climate crisis and pursue sustainable development, they must stop boycotting consensus agreements and support the initiation of an intergovernmental process for reforming the debt architecture.
The G20 has reached its limits. The world cannot afford another decade of deadlock caused by the effectiveness of the Common Framework, while debt levels are skyrocketing. Now is the time to shift the focus of global debt management.
Theophilus Jong Yungong is interim Executive Director of the African Forum and Network on Debt and Development (AFRODAD), and Iolanda Fresnillo is Policy and Advocacy Manager — Debt Justice, European Network for Debt and Development (Eurodad)
IPS UN Office
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