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Secretary-General Launches Report To Break 'The Cycle Of Debt Distress', Ahead Of Major UN Financing Conference
New York, June 27, 2025 - The United Nations Secretary-General today presented new recommendations– Confronting the Debt Crisis: 11Actions to Unlock Sustainable Financing –that aim to break the cycle of debt distress and lay the foundation for unlocking long-term, affordable financing that supports sustainable development. With two-thirds of low-income countries now at high risk of—or already in—debt distress, the report highlights a growing crisis: soaring debt service costs are crowding out vital investments in education, health, and climate resilience. 'The current global debt system is unsustainable, unfair and unaffordable, with many governments spending more on debt payments than on essentials like health and education combined,' said the Secretary-General. 'These 11 immediately actionable proposals can help resolve the debt crisis, empower borrower countries, and create a fairer system.' Prepared by the UN Secretary-General's Expert Group on Debt, the report reinforces the commitments put forward in the FfD4 Outcome Document and makes the case that an end to the debt crisis is entirely feasible—if opportunities are seized. Implementing Policy Priorities Acknowledging the dedication of the Expert Group, the Secretary-General emphasized that the actions, rooted in the Outcome Document, have the potential to drive both short-term impact in relieving pressures on indebted countries, and long-term impact expanding access to long-term, affordable financing that drives sustainable development. The actions are structured around three areas: reforming the multilateral financial system; strengthening cooperation among and providing technical assistance and capacity-building support to borrowing countries; and encouraging borrowing countries themselves to adopt policies and reforms that result in enhanced debt management and improved financing strategies. They include efforts to normalize debt service pauses during crises, including climate-related disasters or other external shocks. This gives space for urgently needed resources to go toward crisis responses. Another area the UN is ready to support is the implementation of a Sevilla forum on debt. About the Secretary-General's Expert Group on Debt Established in December 2024, the Secretary-General's Expert Group on Debt brings together global leaders and technical experts to identify actionable, politically viable solutions to the current debt and development crisis. Led by the UN Conference on Trade and Development (UNCTAD) as Secretariat, with support from the UN Department of Economic and Social Affairs, UN Development Programme and UN Regional Economic Commissions, the Secretary-General called for urgency in implementation. The Group is chaired by Mr. Mahmoud Mohieldin, UN Special Envoy on Financing for the 2030 Agenda, with co-chairs Mr. Paolo Gentiloni, former EU Commissioner for Economy; Mr. Trevor Manuel, former South African Finance Minister; and Ms. Yan Wang, Senior Researcher at Boston University's Global Development Policy Center. About FFD4 The Fourth International Conference on Financing for Development, to take place in Sevilla, Spain, from 30 June to 3 July 2025, presents an opportunity to address these adverse debt dynamics and assist in getting development back on track. The Conference is expected to adopt the Compromiso de Sevilla, an intergovernmentally negotiated outcome, which was approved for adoption by consensus at the Fourth Preparatory Committee Meeting for FFD4 (17 June 2025). The Conference will mark the beginning of implementation of the Outcome Document, signaling a new phase of collective action on financing for development. Coalitions of countries and diverse stakeholders will announce ambitious commitments and solutions under the Sevilla Platform for Action that will operationalize the renewed financing framework and move from dialogue to delivery. The snapshot policy recommendations: A. Multilateral reforms Repurpose and replenish existing funds to enhance liquidity support by extending maturities, financing loan buy-backs and reducing debt servicing amid crises Normalize debt service pauses during crises, including climate-related disasters or other external shocks Reform the G20 Common Framework Reform the debt sustainability analysis to better reflect the position of developing countries Re-channel Special Drawing Rights (SDRs) through the IMF's RST and MDBs where legally possible for scaled-up liquidity and development support B. Co-operation between countries Establish a shared information hub to provide technical assistance and guidance on innovative financial instruments, including debt-for-development swaps Establish a forum for borrowers to share knowledge and experiences, provide advice and enhance the effectiveness of their representation and voice in international forums Expand technical assistance and capacity development to debt management offices and treasuries C. National measures Strengthen institutional capacities to address liquidity risks, currency mismatches and interest rate exposure and improve debt management Improve the quality of investment project pipeline and establishment of national country platforms Reduce the transaction costs and raise the impact of debt swaps and other innovative financial instruments through scale, standardization and frequency and alignment with national development strategies
Observer
06-04-2025
- Business
- Observer
This UN debt initiative is different
Paolo Gentiloni The writer is former European Commissioner for Economy, is Co-Chair of the Expert Group on Debt Economic development requires financing that is affordable, accessible, and has maturities matched to development outcomes. Yet, for most developing countries, none of the above apply. Instead, an escalating 'debt disaster' is unfolding across much of the developing world, exacerbated by a series of cascading global crises. The urgency of the current crisis cannot be overstated. Over half of the 68 countries eligible for the International Monetary Fund's Poverty Reduction and Growth Trust (PRGT) are now facing debt distress – more than double the number in 2015. But even this figure fails to capture the scale of the problem, as many countries outside the PRGT framework are also grappling with crippling debt burdens and liquidity challenges. Between 2017 and 2023, developing countries' average debt-service costs surged by nearly 12 per cent per year – more than double the growth rate of their exports and remittance earnings. Consequently, external debt sustainability deteriorated in two-thirds of developing countries over this period, including in 37 of 45 African countries with available data. Despite their unsustainable debt burdens, many countries are reluctant to default, owing to inefficient debt-resolution mechanisms and prohibitively high political and economic costs. As a result, indebted countries prioritise their creditor obligations over their own development, as ballooning debt-service payments crowd out vital investments in infrastructure and human capital, stifling growth and delaying climate action. Today, 3.3 billion people live in countries that spend more on debt servicing than healthcare and education, the vast majority of them in middle-income economies. UN Secretary-General António Guterres established the Expert Group on Debt in December 2024. If left unaddressed, current liquidity constraints could quickly morph into a full-blown solvency crisis. Urgent intervention is therefore needed to avert a wave of defaults and put indebted countries on the path to economic independence. In response to the escalating debt crisis in the Global South, United Nations Secretary-General António Guterres established the Expert Group on Debt in December 2024. Its members are tasked with identifying and advancing policy solutions to help developing economies – particularly African countries and small island developing states – break free from the vicious cycle of debt distress. Although previous UN working groups have tackled sovereign debt issues, several factors set this initiative apart. The first is timing: successive economic shocks have forced developing countries to borrow, typically at high interest rates, severely restricting their fiscal space. With just five years left until the 2030 deadline for achieving the Sustainable Development Goals (SDGs), developing countries – impeded by a persistent $4 trillion annual financing gap – are on track to meet less than one-fifth of the SDG targets. Second, while previous initiatives focused on developing countries' ability to repay and service their debts, the Expert Group aims to ensure that any proposed solutions support sustainable development. Third, the Expert Group aims to identify and promote solutions that can gain political and public support at the global, regional and national levels. While bold and ambitious measures are essential to addressing the current debt and development crisis, we cannot afford to pursue proposals that stand little chance of achieving the support required to drive meaningful change. With this in mind, the Expert Group seeks to develop comprehensive strategies. If solutions apply only to new debt or fail to foster economic growth, stabilising debt dynamics could take years. Trade-offs must also be carefully considered; increased reliance on guarantees, for example, might mobilise more private capital but could reduce access to concessional financing and grants for sovereigns. Lastly, the Expert Group's composition and outreach make it uniquely positioned to address these issues. Supported by UN Trade and Development (UNCTAD) and other international bodies, the Group brings together former and current officials, policymakers and leading academics, combining technical expertise with high-level influence. The Group's strong ties to key institutions and networks – including international financial institutions, the G20, Jubilee 2025, and various regional and national organisations and agencies – create valuable opportunities to engage policymakers, scholars, civil-society representatives and other stakeholders. By fostering coordination among UN member states, the Group can help mobilise political will and refine emerging proposals. Three upcoming gatherings, in particular – July's Fourth International Financing for Development Conference in Spain, the G20 Summit in South Africa and November's UN Climate Change Conference (COP30) in Brazil – could serve as critical platforms to promote realistic and practical policy solutions. To be sure, no single reform will resolve the developing world's debt crisis overnight. But the crisis has laid bare the limitations of conventional approaches, underscoring the urgent need to rethink the structure and purpose of sovereign debt so that countries are no longer forced to choose between repaying their creditors and securing their future. Given the stakes, any solution must be both swift and capable of uniting a broad coalition of stakeholders. But speed cannot come at the expense of long-term progress. To break the cycle of debt distress, solutions must go beyond short-term fixes and serve as a foundation for sustainable development. @Project Syndicate, 2025
