The world’s poorest countries are spending more on debt service than on health and education combined — and they’re doing so with few effective options to restructure that debt. With the Fourth International Conference on Financing for Development, or FfD4, around the corner, a growing coalition of experts, advocates, and policymakers is pushing for a rethink of the international debt system — one that better reflects today’s financial realities, expands debtor agency, and creates fairer terms for restructuring.
During a Devex Pro briefing on Tuesday, experts on sovereign debt expressed their frustration with the current system. The G20 Common Framework, which is the international community’s main tool for addressing sovereign debt distress, was described as inadequate and underutilized. Intended as a collaborative response to pandemic-era debt crises, the framework has so far helped only a handful of countries restructure their debt.
“Very few cases have moved through the Common Framework,” said Eric LeCompte, executive director of Jubilee USA Network. “Even though two-thirds of African countries, as well as low-income countries, are spending more on debt than on social services, education, and health combined, they continue to make payments because they don’t feel the framework will actually help them to quickly get out of the crisis.”