Washington: The Group of Twenty (G20) Finance Ministers and Central Bank Governors has reiterated its dedication to aiding low- and middle-income countries in tackling debt vulnerabilities in a comprehensive and systematic way. This commitment was highlighted in the Ministerial Declaration on Debt Sustainability released at the conclusion of the G20 meeting held alongside the Annual Meetings of the International Monetary Fund (IMF) and World Bank.

According to South African Government News Agency, the declaration emphasized the obstacles posed by high levels of debt in developing economies, which hinder their ability to invest in essential sectors such as infrastructure, healthcare, and education. The meeting in Washington, DC, marked the fourth gathering of the G20 Finance Ministers and Central Bank Governors, where they discussed actions to enhance debt sustainability.

The G20 acknowledged the significant challenges faced by low- and middle-income countries, including high financing costs, large external refinancing needs, and outflows of private capital. Interest payments on external public debt for low-income countries have more than doubled over the last decade, indicating a pressing need for intervention.

The Ministerial Declaration reiterated the G20’s commitment to strengthening the implementation of the Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI). The DSSI, launched in 2020, provided temporary relief for eligible low-income countries during the COVID-19 pandemic.

The G20 also highlighted the importance of enhancing debt transparency among all stakeholders and supported the ongoing review of the IMF-World Bank Low Income Countries Debt Sustainability Framework (LIC-DSF). This review aims to improve the methodology of Debt Sustainability Analysis (DSA) for low-income countries, thereby better addressing debt vulnerabilities.

Additionally, the declaration noted the potential benefits of crisis resilient debt clauses and the consideration of liability management operations and various debt swap models, such as debt-for-development and debt-for-climate, on a voluntary basis.

The Finance Ministers and Central Bank Governors stressed the importance of engaging with stakeholders to advance a common understanding of debt management issues. They encouraged the international community to support countries facing liquidity challenges with strong reform agendas and called for continued efforts by the IMF and World Bank to develop feasible support options.

The G20 reaffirmed its commitment to address gaps in debt management, transparency, public financial management, and domestic resource mobilization through capacity-building initiatives.