Leading international development experts have called for fundamental reforms to the global debt architecture, warning that developing nations face unprecedented fiscal pressures threatening healthcare, education and climate action investments.
The experts delivered their assessments during a media briefing on November 13 ahead of the Group of 20 (G20) Global Leaders Summit in Johannesburg. Panelists emphasized that Africa and other developing regions are experiencing debt servicing costs that consume substantial portions of government revenues while yielding minimal development returns.
Mahmoud Mohieldin, United Nations (UN) Special Envoy on Financing Sustainable Development, described the situation as one of the biggest challenges of the current era. He noted that warnings preceded the crisis, with the World Bank identifying a rising fourth wave of debt as early as 2019.
“Nobody can claim that they haven’t seen it coming,” Mohieldin stated. He revealed that global debt has increased by more than 25 percent since 2019, while developing economies and emerging markets paid $25 billion more to external creditors in debt service than they received in new disbursements during 2023.
Trevor Manuel, chair of the G20 Africa Expert Panel, highlighted systemic inequities in how credit rating agencies assess African economies compared to developed nations. He cited Namibia as an example, noting the country will grow at 3.7 percent this year with a debt to Gross Domestic Product (GDP) ratio of 67.7 percent yet carries a 10-year bond yield of 10.1 percent.
Germany, by contrast, faces negative 0.5 percent growth with a 63.5 percent debt to GDP ratio but maintains a 10-year bond yield of just 2.4 percent. Manuel argued these disparities reflect structural flaws in rating methodologies rather than genuine risk assessment.
“Defaults by sovereigns are few and far between. It’s because defaults are unbelievably costly,” Manuel explained. He added that countries effectively default on public services, particularly healthcare and education spending, while ensuring creditors receive payment.
Jason Braganza, Executive Director of the African Forum and Network on Debt and Development (AFRODAD), emphasized the human dimensions of debt distress. He stated that close to half the continent now allocates more than half of government budgets and revenues toward debt interest service repayments.
“There is a default on development and a default on social spending,” Braganza stated. He warned that citizens increasingly see regressive taxes funding debt payments rather than social expenditure, fueling unrest across Kenya, Madagascar, Tanzania and Cameroon.
Africa’s debt stock has topped $1.3 trillion, with debt servicing approaching half a trillion dollars in the 2024 to 2025 period. Braganza advocated for shifting power dynamics in global debt architecture toward more democratic spaces like the United Nations rather than exclusive G20 frameworks.
Vera Songwe, chair and founder of Liquidity and Sustainability Facility, linked debt challenges to climate finance gaps. She argued that appropriate climate investment represents a growth strategy that developing nations cannot pursue while hemorrhaging resources to debt service.
“If we did climate right, it would be a growth strategy. And the reverse of the debt conversation is growth,” Songwe stated. She emphasized that green, sustainable and resilient growth produces faster and more durable economic expansion than traditional development models.
Songwe explained that emerging markets will become the largest polluting countries over the next decade as advanced economies clean up historical emissions. This makes climate-integrated growth frameworks essential for both environmental and economic sustainability.
Martha Tukahirwa, Regional Coordinator for Africa at Fight Inequality Alliance (FIA), described the crisis from grassroots perspectives. She noted that women, girls and gender-diverse people bear disproportionate burdens through care responsibilities and economic instability.
Tukahirwa announced plans for a 99 Percent People’s Summit alongside G20 proceedings. The event aims to build shared narratives around debt justice that center affected populations rather than elite policymaking circles.
“The G20 is bringing 20 of the biggest economies in the world and really trying to reimagine what a new economic world order is. But this also means that there is the 99 percent that are seated on the margins,” Tukahirwa explained.
Mavis Owusu-Gyamfi, President and Chief Executive Officer (CEO) of the African Center for Economic Transformation (ACET), presented modeling showing potential development gains from capping debt servicing. Analysis indicates that limiting debt payments to 5 percent of revenues could provide clean water access for an additional 720,000 people while improving sanitation for millions.
Between 2024 and 2027, maturing Eurobonds will force some countries to spend over 30 percent of revenues on debt payments. Owusu-Gyamfi described this as a conflation of crises where high debt costs squeeze domestic investment capacity while climate shocks demand greater resilience spending.
“There is this horrible mix of forces, all happening at the same time, to make it difficult for you to transform and grow your economy,” Owusu-Gyamfi stated. She noted that frustrated youth increasingly protest being asked to pay higher taxes for poor quality employment prospects.
Marina Zucker-Marques, Senior Academic Researcher at Boston University Global Development Policy Center, addressed China’s role as a major creditor. She noted that Chinese lenders contributed approximately 60 percent of debt service pauses during the Debt Service Suspension Initiative (DSSI) despite holding only 30 percent of relevant debt stocks.
Zucker-Marques suggested that current low interest rates in China, where the interbank rate sits at 1.3 percent, create opportunities for refinancing existing Chinese loans on more favorable terms. She advocated for increased Chinese imports from developing countries to provide foreign exchange for debt repayment.
Experts criticized the G20 Common Framework for debt restructuring, noting it has relieved just 7 percent of total external debt owed by at-risk, lower-income countries. Mohieldin proposed extending framework access to middle-income countries, implementing automatic debt service standstills during negotiations, and establishing faster private sector engagement mechanisms.
Manuel revealed that the International Monetary Fund (IMF) holds 90 million ounces of gold valued at $15 per ounce on its books, despite current market prices exceeding $4,100 per ounce. He suggested this valuation gap represents resources that could support fresh starts for distressed economies.
Discussions also addressed domestic debt, which now comprises 55 percent of total African government debt according to recent analysis. Songwe warned that domestic borrowing crowds out private sector access to finance as banks purchase government paper offering high returns with minimal risk.
She explained that without functioning secondary markets for local currency debt, financial institutions hold sovereign paper rather than converting it to liquidity for productive investment. This dynamic kills growth in both government and private sectors.
Panel members debated proposals for an African credit rating agency. While Manuel expressed skepticism about whether unknown agencies could influence issuers, Braganza defended the initiative as politically significant for challenging the oligopoly of three major rating firms.
The briefing occurred as developing countries face record interest burdens. In 2024, 61 developing countries allocated 10 percent or more of government revenues to interest payments, with net interest costs reaching $921 billion representing a 10 percent annual increase.
African governments spend on average 10 to 30 times more on external debt servicing than on climate action. Between 2024 and 2030, debt repayments in Africa will amount to 137.4 percent of the continent’s climate finance needs.
Official development assistance to Africa dropped almost 7 percent in 2023 to $74 billion, while aid to Latin America and the Caribbean fell 15 percent to $14 billion. Overall development assistance from donor nations declined 7.1 percent in real terms during 2024 compared to the previous year.
Mohieldin outlined proposals from UN expert groups, including normalizing debt service pauses during crises, establishing a borrowers club as the Global South answer to the Paris Club, and creating a debt forum where credit supply and demand can meet under responsible lending principles.
The UN expert group has recommended better use of Special Drawing Rights (SDRs), improved debt sustainability analyses that adequately account for infrastructure and sustainability investments, and enhanced capacity building for debt management units in borrowing countries.
Trevor Manuel’s remarks specifically related to the Africa Expert Panel report recommendations remain under embargo until November 22 at noon South Africa time. His panel is expected to release detailed proposals addressing shared responsibility for the debt crisis and mechanisms for affording distressed countries fresh starts.
Experts emphasized that technical solutions exist but require political will for implementation. They called for transparency reforms compelling rating agencies to disclose methodologies, stronger oversight of both foreign and domestic debt markets, and rules-based systems preventing ad hoc arrangements that benefit select countries.
The G20 summit in Johannesburg represents a critical opportunity for advancing debt relief frameworks that balance creditor interests with development imperatives. Panelists stressed that without comprehensive reforms, millions face deteriorating health, education and economic outcomes as governments prioritize debt payments over public services.
