BANGKOK, Thailand, Jan 9 (IPS) – The debt disaster is back. Indeed, aid agency Cafod reports that developing countries at the moment are facing “the sharpest debt crisis in history.”
At least 54 countries are in a debt crisis – greater than double the number in 2010. An extra 57 countries are in danger of a debt crisis. Over the last decade, interest payments to developing countries have increased overall by 64% and for Africa by 132%.
African countries pay creditors greater than $100 billion a year. The share of African countries’ budgets allocated to debt repayment is 4 times higher than in 2010.
Net financial flows to developing countries are currently negative, meaning debt service repayments are currently higher than inflows to governments.
“Debt is choking countries in the Global South,” says Anglican Archbishop of Cape Town Thabo Makgoba, “denying us what we need in health and education. Please let us breathe!”
However, the scale of the crisis didn’t force world leaders to act. So far, the debt restructuring mechanisms of the G20 countries don’t meet the needs in any respect.
The reoccurrence of the debt crisis is even cynically presented as a reason why it mustn’t be resolved. “In 2000, their debt was written off,” goes the mantra, “now they are back, which means they failed and there is no salvation for them.”
This is a false narrative that deliberately ignores two key points: first, that the debt relief provided by the broad-based Jubilee 2000 movement has saved and adjusted tens of millions of lives, including in affected countries which have moved from a majority of children leaving primary school to a majority of children ending primary school; second, creditors are withholding reforms needed to forestall catastrophic levels of debt defaults from recurring.
But being unfaithful has not taken away the “debt cancellation failure” story’s power to justify and enable inaction.
Debt restructuring stays a painfully slow, ad hoc process, dominated by wealthy countries and depending on creditor persuasion. This isn’t a bug, it’s a feature. It isn’t surprising that non-public lenders, who currently constitute the largest share of creditors on the debt of crisis-affected countries, are hampering efforts to resolve the crisis: without sufficient coercion, they are going to proceed to accomplish that.
It seems almost unnecessary so as to add that we have now entered an era by which anything requiring multilateral cooperation has develop into even tougher. Yet 2025 also brings two significant reasons for hope.
First of all, wait a minute.
As the first-ever African chair of the G20, South Africa seized the opportunity to steer the intergovernmental push for motion on debt, effectively placing it at the center of global economic diplomacy. The South African G20 Presidency has unveiled a daring agenda that prioritizes tackling what they frankly call “crippling levels of public debt that are forcing many countries to sacrifice their development commitments to service unmanageable debts.”
South Africa has set out a metamorphosis framework for implementing the G20 summit: “We must take action to ensure debt sustainability for low-income countries. A key obstacle to inclusive growth in developing economies is unsustainable levels of debt, which limit their ability to invest in infrastructure, health care, education and other development needs.”
“South Africa will seek to develop sustainable solutions to address high structural deficits and liquidity challenges, and extend debt relief to developing economies. South Africa will also strive to ensure fairness and transparency in sovereign credit ratings and will address the issue of high-risk premiums for developing economies. The key to solving debt is dealing with the cost of capital.
Secondly, movement.
Intergovernmental diplomacy alone, however well conducted, will never overcome the imbalance of power in global finance. Solving the debt crisis requires a decisive and organized mass movement of people. This movement is growing.
Among those uniting in the broad Jubilee 2025 movement are civil society organizations, from climate justice marchers to human rights activists, trade unions from all sectors and all parts of the world, and artists raising their voices to demand an end to the oppression of debt .
At the heart of the Jubilee 2025 movement are faith communities that were also at the heart of Jubilee 2000. As the name of the Jubilee suggests, debt cancellation is not merely a technical and economic issue, but a moral issue with deep roots in biblical tradition and an ethical understanding of the common good.
“We urgently need a new debt jubilee,” said faith leaders from across Africa in a joint call to motion, “to bring hope to humanity and bring the planet back from the brink.” Faith communities mix deep local organization with a broad global network, mobilize in the Global South and Global North amongst the most excluded and affluent, and have proven particularly difficult for policymakers to disregard.
A moment of hope, fueled by a movement of hope. Debt problems do not have to be fate. This isn’t a prediction that the debt campaign will be successful, but reasonably an assessment that it has a fighting likelihood. “More than a matter of generosity,” Pope Francis declared in his 2025 bull, debt cancellation is “a matter of justice.”
It is price noting that he titled the document – “Hope Does Not Fail”.
UN IPS Office
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