More than half of all lower-income countries are in or at high risk of debt distress. Those countries are paying exorbitant debt servicing costs at the expense of schools, hospitals, climate action, or other essential services. Thirty-two African countries now spend more on external debts than they do on healthcare. Twenty-five African countries spend more on external debt payments than on education.
Africa's debt stocks have more than doubled in the past decade, and debt service costs are at an all-time high. African countries are set to pay $89 billion in debt payments in 2025 alone, significantly more than they receive in development assistance ($60 billion in 2023).
Yet current action to address the debt crisis is inadequate and slow. So far, the G20's plan to tackle this problem through the Common Framework has relieved just 7% of the total value of external debt owed by at-risk, lower-income countries.
While four countries have applied to the Common Framework (Zambia, Ghana, Ethiopia and Chad), only three countries have completed the process, and only two have received debt relief. The net present value (NPV) of Ghana's debt relief is roughly $9.3 billion; the NPV of Zambia's debt relief is $4.3 billion. Chad completed the process but did not receive any reduction in debt, and Ethiopia's process in ongoing. For context, the 36 lower-income countries in or at high risk of debt distress owe $184 billion (NPV) in outstanding debt. Despite crushing debt levels, most countries are choosing to service their debts rather than go through the Common Framework process.
There are common-sense, effective, and practical solutions that leaders can put in place to relieve the debt burden and restore growth, stability, and hope across the world.
- Urgently reduce current debt burdens and servicing costs, including through the replenishment of the World Bank and IMF's debt-relief funds, ensuring that countries can access a range of debt relief options that fit their unique circumstances.
- Support innovation and reform to promote fast and fair debt restructuring, more effectively using the existing policy toolkit of international financial institutions to avoid World Bank and IMF financing being used to bail out the holders of unsustainable debts. Support changes to debt legislation to discourage hold-out creditors, and reform the Common Framework process to make it more efficient and fair.