Opinion: Will rich nations finally deliver solutions to the debt crisis?
We are at a crucial juncture. Global discussions on how to respond to low- and middle-income countries’ increasing debt burdens could lead us to a prolonged debt crisis in the global south, especially in Africa, or to game-changing debt architecture reform. The question is: What path will high-income countries choose?
Unfortunately, rich countries seem averse to change, unwilling to accept even the possibility of discussing real reforms to debt architecture. They appear to be more worried about retaining power and privileges — in the face of China’s growing relevance — than finding a lasting solution to a debt problem that has plagued many countries in the global south for decades. It is a problem that past and present debt relief programs have failed to resolve.
Before the pandemic, high debt levels in many developing countries undermined governments’ capacity to deliver public services. When Covid-19 created an unprecedented global economic shock, affecting the capacity of developing countries to face their debt service payments, there was no instrument in place to address the need for debt relief.
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