Alexander Kozul-Wright
What You Need to Know
The recent G20 summit in Johannesburg, led by South Africa, highlighted the ongoing sovereign debt crisis impacting the Global South. Despite repeated commitments, no new proposals emerged to alleviate the financial burdens faced by heavily indebted nations, particularly in Africa, raising concerns over the effectiveness of international cooperation in addressing these challenges.
Africa. Leaders of the world’s most influential nations gathered in Johannesburg last weekend for the G20 summit, chaired by South Africa, which was described as a pivotal moment in addressing the debt crisis plaguing the Global South.
South African President Cyril Ramaphosa consistently emphasized that the issue is central to his agenda, asserting that rising repayment costs have left governments, particularly in Africa, with little room to fund essential services such as health and education.
Despite repeated commitments—including leaders’ declarations to “enhance the implementation of the G20 common framework”—South Africa did not present any new proposals to ease financial constraints on debt-burdened countries.
Hopes that world leaders would use the summit to tackle the sovereign debt crisis diminished when U.S. President Donald Trump was absent from the meeting, amid disagreements with South Africa regarding its domestic policies, at a time when the world is witnessing Washington’s withdrawal from multilateralism.
The summit also marked the end of a brief period of Global South leadership in the G20, following Indonesia’s presidency in 2022, India’s in 2023, and Brazil’s in 2024. The United States is set to assume the presidency on December 1.
Debt Fragility
The G20 includes 19 advanced and emerging economies, along with the European Union and the African Union, representing 85% of global GDP and nearly two-thirds of the world’s population.
In October, finance ministers and central bank governors met in Washington and issued a consensus statement on debt, acknowledging that high debt levels pose significant obstacles to inclusive growth in many developing economies, limiting their ability to invest in infrastructure, disaster response, healthcare, education, and other developmental needs.
The statement also reaffirmed their commitment to support low- and middle-income countries in addressing debt fragility effectively and comprehensively.
Record Debt Levels
According to the Institute of International Finance, total debt in developing countries reached a record high of $109 trillion by mid-2025.
The COVID-19 pandemic, climate shocks, and rising food prices have forced many poor countries to rely on debt to stabilize their economies, crowding out other investments.
For instance, the United Nations estimated that over 40% of African governments spend more on servicing debt than on healthcare.
Lack of Progress
Before the final statement of the summit was issued, 165 charitable organizations condemned the slow progress of the group in achieving debt sustainability in a letter, urging President Ramaphosa to implement reforms before handing over the G20 presidency to the United States.
The letter called on the International Monetary Fund to sell its gold reserves and establish a debt relief fund, as well as supporting the creation of a “club of borrowers” to facilitate cooperation among low-income countries.
However, to date, none of the countries participating in the common framework—Ethiopia, Zambia, Ghana, and Chad—have completed debt restructuring deals, and the program has only provided 7% of the debt costs for these four countries.
Double Blow from Debt
Since the early 2000s, the IMF, World Bank, and some Paris Club creditors have canceled over $75 billion in debt.
However, following the 2008 financial crisis, private sector lenders began to flow into low-income economies, gradually replacing cheaper loans from international institutions.
Between 2020 and 2025, about 40% of public external debt payments from low-income countries went to commercial lenders, while only a third went to multilateral institutions.
China has emerged as the largest single creditor globally, particularly in the Global South, committing over $472 billion through its banks between 2008 and 2024.
Need for an International Mechanism
Reports from experts and civil society organizations indicate that the diversity of lenders and the difficulty in coordinating among them have made resolving crises more costly and complex.
Many voices have called for the establishment of an independent body for debt restructuring, similar to the U.S. bankruptcy court, to expedite negotiations and reduce economic costs.
However, with current multilateral cooperation weakened, these aspirations remain elusive.
The G20, comprising 19 major economies and the European Union, represents about 85% of the global GDP and two-thirds of the world population. The group has been pivotal in discussions surrounding global economic stability, particularly in addressing the rising debt levels in developing countries. Recent crises, including the COVID-19 pandemic and climate shocks, have exacerbated these debt issues, prompting calls for more effective debt management strategies.
Historically, the G20 has aimed to foster international economic cooperation, yet the recent summit revealed significant gaps in addressing the pressing debt crisis.
