G20 presidency: A driving force against global debt vulnerability

Discussions on escalating global debt vulnerabilities have taken centre stage. Since 2000, global public debt has surged fivefold, and developing nations now bear nearly 30% of this burden. The most vulnerable are low and middle-income countries, juggling between servicing external debt and meeting critical domestic needs like food and fuel.

- V. ANANTHA NAGESWARAN & TULSIPRIYA RAJKUMARI

The repercussions extend far beyond the economic realm, with this complex debt landscape intersecting with issues such as climate change to create a multifaceted crisis. Addressing this demands a coordinated but customized approach to debt restructuring tailored to the unique circumstances of each nation’s debt structure.

At the Voice of the Global South Summit, Prime Minister Narendra Modi in January 2023 stated, “As India begins its G20 presidency this year, it is natural that our aim is to amplify the Voice of the Global South." Reflecting this aim and guided by the theme of ‘One Earth, One Family, One Future,’ managing global debt vulnerabilities was adopted as a key priority of the Indian presidency.

India has emphasized the imperative to address debt vulnerabilities in low-income and vulnerable middle-income countries. Acknowledging the urgency of this issue, G20 members engaged in extensive deliberations to strengthen multilateral coordination and facilitate coordinated debt treatment for debt-distressed countries.

The subject is not new to the G20. To help countries severely affected by the covid crisis, the G20 launched the Debt Service Suspension Initiative (DSSI) in May 2020. It allowed the poorest nations (specifically, 73 low- and lower-middle-income countries) to pause/suspend debt-service payments if they asked. As the DSSI would have ended in December 2021, the G20 and Paris Club launched the Common Framework in November 2020 to facilitate debt treatment for the 73 DSSI-eligible countries upon their request.