G20 must commit to debt relief

As G20 leaders met in Johannesburg last month, they faced a grim reality: many developing-country governments are spending more than they can afford on debt service. To keep funds flowing to foreign creditors, policymakers have been forced to cut spending on education, health care, and infrastructure. These countries have so far avoided default, but at the expense of their own development.

- Olusegun Obasanjo

The fact that governments across Africa, Asia, and Latin America must close hospitals and cancel school-lunch programmes to service their debt is not only a moral failure; it is also a strategic one. A world where countries cannot invest in sustainable growth and development will struggle to achieve stability, prosperity, and climate resilience.

Five years ago, amid the Covid-19 pandemic, the G20 launched the Common Framework for Debt Treatment to help heavily indebted countries restructure their debts in an orderly, prompt, and equitable manner. But the promised relief has not materialised. According to the International Monetary Fund and the World Bank, 37 out of 67 low-income countries eligible for concessional funding are in or at high risk of debt distress, yet only four — Chad, Zambia, Ghana, and Ethiopia — have applied for restructuring under the mechanism. Their experiences have revealed the weaknesses of the Common Framework: it offers far too little relief — and too late.