The Group of 20 major economies, led this year by South Africa, said on Thursday that while the risk of a global debt crisis remains contained, many vulnerable low- and middle-income countries continue to face crippling borrowing costs and structural barriers that threaten growth and stability.
Meeting in Washington during the annual sessions of the International Monetary Fund and World Bank, G20 finance officials released a long-awaited declaration on debt sustainability. The statement pledged to strengthen the G20 Common Framework for Debt Treatments and to improve debt transparency and coordination, while giving borrowing nations a greater voice in decision-making.
“We will continue to pursue predictable, timely, orderly and coordinated debt treatment,” the declaration read, noting that several struggling economies still required “further international assistance.”
The language underscored a growing shift among global financial leaders away from sweeping debt forgiveness and toward helping countries “grow their way out of debt.” IMF and World Bank officials have increasingly argued that reforms, productivity gains and access to capital markets must now drive recovery, not debt cancellation.
The declaration marks the G20’s first standalone communique on debt since the COVID-19 pandemic, a moment many hoped would spark renewed international solidarity. But the document was met with frustration by debt relief advocates, who said the statement lacked ambition and failed to propose new mechanisms to confront what they described as an escalating crisis.
“This is inadequate and unambitious, falling far short of what is needed to tackle the worst debt crisis the world has ever seen,” said Iolanda Fresnillo of the European Network on Debt and Development. “It includes no new initiatives and highlights the limitations of the G20 in addressing real global crises.”
Her criticism reflects growing impatience among campaigners, who argue that despite years of summits and pledges, little has changed for the world’s most indebted nations. Global borrowing costs have soared in the wake of rising interest rates, and the fiscal space for developing countries has narrowed sharply.
Eric LeCompte, executive director of Jubilee USA Network, noted that developing nations spent an astonishing $921 billion on interest payments alone in 2024, a 10% increase from 2023, and are on track for even higher payments this year. “We see consensus around the severity of the debt payment challenges, but not yet a consensus on how to solve them,” he said. “Countries cannot borrow their way out of this crisis.”
For South Africa, which holds the G20 presidency this year, the challenge was to mediate between the priorities of wealthy creditor nations and the urgent realities facing developing economies. Duncan Pieterse, director-general of South Africa’s National Treasury, said the discussions had achieved “constructive progress,” particularly in amplifying the voices of borrowing nations in global debt dialogues.
He said G20 officials had also taken note of faster resolution times in newer cases under the Common Framework compared with earlier examples such as Chad. But he acknowledged that “more work is needed to make the process more predictable and inclusive.”
South Africa’s leadership has pushed for reforms that move beyond what many in the Global South view as creditor-dominated arrangements. Pretoria has consistently argued that the current system leaves debtor nations vulnerable to cycles of dependency and austerity.
However, with the United States set to assume the G20 presidency next year, expectations for radical reform are low. Washington has significantly reduced its development aid commitments and remains cautious about endorsing new debt relief measures, citing fiscal pressures at home.
Analysts say the G20’s declaration, while symbolically important, will do little to change the immediate picture for nations trapped between soaring repayments and urgent social needs. Many African and Latin American countries are still struggling to fund basic services and climate adaptation projects, even as debt consumes record portions of their budgets.
“Without comprehensive debt restructuring or new financing mechanisms, this is simply crisis management,” said one European economist familiar with the negotiations. “The G20 recognises the problem but is not yet ready to take the political risks necessary to solve it.”
For now, the message from Washington is one of cautious optimism, and lingering frustration. The G20 says the worst-case scenario of a systemic collapse has been averted. Yet for countries on the brink, that reassurance may ring hollow.
