South Africa Urges G20 to Reassess Debt Restructuring Framework for Poor Nations
South Africa’s Finance Minister, Enoch Godongwana, has called on the Group of Twenty (G20) to reconsider the debt restructuring framework it established four years ago for low-income countries, stating that it fails to account for the full extent of their debt burdens.
In remarks delivered during South Africa’s current G20 presidency, Godongwana emphasized the need for a better review of the G20’s common framework, which he criticized as inadequate for addressing the challenges faced by countries struggling with high debt service costs. “We need a better review of the common framework; it is insufficient to handle the kind of challenges we face in terms of debt servicing costs,” he said. He also pointed out that the G20’s debt restructuring plan is slow and politically risky, with some countries, like Zambia and Ghana, having endured years of prolonged debt restructuring processes.
A United Nations report released last month revealed that over 40% of African nations are spending more on servicing debt than on health, a stark reflection of how these financial obligations undermine the continent’s development goals. Earlier this year, Angola even warned that it may struggle to pay public sector wages due to rising debt costs.
The UN also reported that Africa’s external debt has surged to over $650 billion, with debt service costs nearing $90 billion in 2024.
Godongwana emphasized the need for a shift in the way the international community provides financial assistance to low-income nations. One of the issues the G20 must tackle, he argued, is how multilateral development banks can offer more concessional financing to help poor countries reduce their reliance on international debt markets.
On December 3, South Africa officially assumed the presidency of the G20. President Cyril Ramaphosa outlined the country’s goals for the G20 presidency, which include advancing progress on several inclusive issues by creating three working groups focused on economic growth, industrialization, job creation, food security, artificial intelligence, data governance, and sustainable development innovation.
As the G20 gathers to address global challenges, the urgency of revisiting the debt restructuring framework for developing nations continues to grow, especially as the costs of servicing external debt continue to burden Africa and other parts of the Global South.
