South Africa Wants G-20 Rethink of Poor Nations’ Debt Costs
South Africa wants the Group of 20 to reassess the system it set up four years ago to restructure poor nations’ debt because it doesn’t consider the full extent of their burdens, Finance Minister Enoch Godongwana said.
“We need a better review of the Common Framework,” he said. “It’s insufficient to deal with the kind of challenges we’re dealing with in terms of debt service costs.”
Both debtors and creditors have heavily criticized the G-20’s blueprint as being too slow and politically fraught. Some debt restructurings, such as those in Zambia and Ghana, have dragged on for years. It also doesn’t address nations saddled by high debt-service costs.
More than 40% of African countries allocate more funds to debt servicing than to health, a stark reflection of how these financial obligations are undermining the continent’s development goals, the United Nations said in a report last month. Earlier this year, Angola warned that it may not be able to pay state workers’ wages because of the costs.
Africa’s external debt has climbed to more than $650 billion, and debt-servicing costs reached almost $90 billion in 2024, the UN said.
Poor nations often have to tap international debt markets — which charge a premium because they consider the countries to be risky investments — to fund their budget deficits.
One of the issues the G-20 needs to work through is how multinational development banks can offer more concessional financing so that poor nations can reduce their dependence on international debt markets, Godongwana said.
South Africa, which took over the G-20 presidency from Brazil Dec. 1, has made easing the heavy debt burden of low-income nations a priority.
