South Africa, under its new presidency of the G-20, is calling for a reassessment of the debt restructuring framework established by the group four years ago to address poor nations’ debt burdens. Finance Minister Enoch Godongwana stressed the need for a better review of the “Common Framework,” which he believes is insufficient in addressing challenges like high debt-service costs. The G-20’s current blueprint has been criticized for being slow and politically complex, as evidenced by the prolonged debt restructuring processes in countries like Zambia and Ghana.
According to the United Nations, over 40% of African nations spend more on debt servicing than on critical sectors like health, hindering the continent’s development goals. Africa’s external debt has risen to over $650 billion, with debt-servicing costs nearing $90 billion in 2024. This financial strain often forces poor nations to rely on international debt markets, which charge high premiums due to perceived risks.
South Africa, having assumed the G-20 presidency from Brazil on December 1, has prioritized easing the debt burden on low-income countries. Godongwana emphasized the need for multinational development banks to provide more concessional financing, allowing these nations to reduce their reliance on costly international markets. South Africa’s leadership aims to push for reforms that will create a more efficient and fair system to help poor nations manage their debt and support sustainable development.
These initiatives come at a critical time, as nations like Angola have raised concerns about potentially being unable to pay state workers due to high debt costs. South Africa’s presidency will focus on addressing these urgent financial challenges faced by low-income countries
