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Africa: G20 Members Commit to Addressing Debt Vulnerabilities

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Africa: G20 Members Commit to Addressing Debt Vulnerabilities


Members of the G20 have pledged to address the mounting debt pressures in low and middle-income economies amid the global financial turbulence.

This is according to Deputy Finance Minister Dr David Masondo who addressed a media briefing on Friday following the third G20 Finance Ministers and Central Bank Governors (FMCBG) Meeting held in Kwa-Zulu Natal this week.

Developing and emerging economies – particularly those in Africa – are grappling with high and rising debt vulnerabilities, shrinking fiscal flexibility and high borrowing costs.

“[Members]…reaffirmed their commitment to further strengthen the implementation of the G20 Common Framework. To give effect to this, the G20 FMCBG endorsed the G20 Note on Lessons Learned from the Initial Common Framework Cases and the G20 Note on Steps of a Debt Restructuring under the Common Framework.

“These documents have been published on the G20 website. In addition, fact sheets on the Common Framework country cases for Chad, Zambia and Ghana have also been published on the G20 and Paris Club websites to improve information sharing,” he said.

WATCH | Closing media briefing

In further discussions, the members also acknowledged the G20 Note on Special drawing rights [SDRs] which, the Deputy Minister said, “highlights the achievement of exceeding $100 billion in voluntary channelling of SDRs or equivalent contributions for countries in need.”

The pledges to this currently stand at some $113.8 billion coming from 35 countries.

“Members also underscored the need for enhancing the representation and voice of developing countries in decision-making in MDBs [Multilateral Development Banks]and other international economic and financial institutions.

“Members recognised the relative resilience of capital flows in Emerging Market and Developing Economies [EMDEs] despite heightened global policy uncertainty – underscored by strong macroeconomic fundamentals and sound policy frameworks.

“They also highlighted the growing influence of non-bank financial institutions [NBFIs] and stressed the importance of gaining a deeper understanding of their impact on these flows. Members further emphasised the significance of structural reforms in fostering long-term sustainable capital flows to EMDEs,” said the Deputy Minister.

Energy transitions

Regarding energy transitions, Masondo said during the meeting, Ministers and central bank Governors considered key recommendations for “enhancing collaboration among Vertical Climate and Environment Funds, Multilateral Development Banks, National Development Banks and the private sector”.

“Members reaffirmed the urgency of scaling up financing for adaptation and just transitions and reflected on key recommendations emerging from a comprehensive analysis undertaken by multiple knowledge partners. These included guidance on integrating adaptation into voluntary transition planning, addressing insurance protection gaps, scaling financing mechanisms, and strengthening enabling environment.

“[They] also received an update on the work of the Climate Data Steering Committee, which has developed a set of principles for the development of a Common Carbon Credit Data Model aimed at promoting interoperability and improving transparency of carbon markets.

“They noted that the draft data model is currently undergoing a public consultation with both the private and public sectors,” the Deputy Minister said.