South Africa, which currently chairs the G20 group of major economies, has called on wealthier nations and multilateral lenders to take urgent steps to address Africa’s deepening debt crisis.
Highlighting the immense funding gap facing the world, President Ramaphosa said: “It is estimated that the world needs an extra $4 trillion a year to meet the UN Sustainable Development Goals by 2030, a gap which can only be closed through more affordable, long-term sustainable financing.”
GLOBAL | Total Global Debt to Surpass $100 Trillion, 93% of Global GDP, By End of 2024, Warns IMF
IMF also warns of possible 115% of GDP debt levels within 3 years driven by slower growth, tighter financial conditions, and policy uncertainties.https://t.co/XE1JBvd60Y @IMFNews pic.twitter.com/FJG0AJFmpy
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Drawing attention to the growing challenge posed by debt repayments, he noted: “Around 3.4 billion people now live in countries that are spending more on interest payments to creditors than on health and education. While few countries have defaulted on their debt, they are defaulting on their people, their environment, and their future.”
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The 5 countries are:
https://t.co/d2mUnMsV77 pic.twitter.com/crife5kPUc
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Ramaphosa said the focus must be on ensuring timely intervention and adequate relief for countries facing liquidity challenges.
“There is no shortage of solutions to address the debt burden. What we need is the political will to translate proposals into action and to do so at a scale that matches the size of the challenge.”
The South African Finance Minister, Enoch Godongwana, during a meeting of G20 finance ministers and central bank governors held in Sao Paulo, Brazil, also stressed the need for swift and coordinated global action, particularly from the G20, to tackle the debt burdens plaguing many African economies. He emphasized that the continent’s challenges are not just financial but have wider implications for development and stability.
“The G20 must act decisively to address the worsening debt situation in low- and middle-income countries, especially in Africa,” Godongwana said, according to South African state broadcaster, SABC.
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The US Dollar effective exchange rate reached a 20-year high last year, increasing the burden of dollar-denominated debt service payments. Interest payments as… pic.twitter.com/QOvgjdAGv6
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He also warned that the mounting debt could derail progress on development goals across Africa unless significant relief measures are implemented. Many African nations have struggled with rising interest payments and currency depreciation, worsened by global inflation and external shocks such as the COVID-19 pandemic and the Ukraine conflict.
Africa’s $824 Billion Debt Burden and Opaque Resource-Backed Loans Hinder its Potential, African Development Bank President Warns
The continent would pay $74 billion in debt service payments this year [2024] alone, a sharp increase from $17 billion in 2010.… pic.twitter.com/2M7Dy1wP4J
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As G20 chair, South Africa has placed Africa’s debt crisis high on the agenda, urging international lenders – including the International Monetary Fund (IMF) and World Bank – to step up restructuring efforts and ensure fair burden-sharing among creditors.
Last year, IMF Managing Director, Kristalina Georgieva, acknowledged that many African nations were at risk of debt distress, and highlighted the importance of the G20’s Common Framework for Debt Treatments. However, progress has been slow, with countries like Zambia, Ghana, and Ethiopia still struggling to finalize restructuring agreements.
South Africa’s call reflects a broader push by African leaders for a more equitable global financial system – one that considers the continent’s vulnerabilities and development needs. With several African countries having already defaulted or on the brink of doing so, the urgency for coordinated international support has never been greater.
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The remarks come amid a rejuvenated debate on the nature of foreign activities on the continent.
For instance, several African countries… pic.twitter.com/4pbloeOBZ3
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