Copy of Policy Note 1

This policy brief by the Brookings Institution, published via the South African Institute of International Affairs, argues for strengthening the G20 Global Sovereign Debt Roundtable (GSDR) to address unsustainable debt in the Global South. The authors propose reforming the Common Framework for Debt Treatments (CF), integrating climate financing into debt management, and addressing the systemic drivers of high debt service costs, particularly for African nations.

• Developing countries in the Global South have experienced rapid debt accumulation over the last decade due to high investment needs, low domestic revenue, ultra-low interest rates, and increased credit from China and the private sector. This situation was exacerbated by monetary tightening in advanced economies following the COVID-19 pandemic, which increased debt servicing costs and limited spending on health, education, and climate.
• The G20's Common Framework for Debt Treatments (CF) is considered insufficient and faces operational challenges, including slow implementation, creditor coordination issues, and a lack of consensus on debt treatment parameters. African countries are the only nations that have sought assistance under the CF, and in the cases of Chad and Zambia, it took at least two years to reach agreements with creditors.
• The authors propose that the South African G20 presidency should advocate for the immediate suspension of all debt service payments when a country requests treatment under the CF. This suspension should not be net present value neutral to pressure creditors to resolve CF deficiencies quickly. Additionally, the authors suggest expanding CF and debt suspension eligibility to include middle-income countries.
• There is a critical need to integrate climate action into sovereign debt strategies, as high debt service payments hinder the ability of African countries to invest in climate measures. The brief recommends scaling up climate-resilient debt clauses (CRDCs) for all low- and middle-income countries, with triggers including wildfires, landslides, droughts, floods, hurricanes, and health pandemics.
• The G20 should establish working groups to explore market-based solutions and statutory approaches to debt restructuring. Market-based solutions could include a scheme similar to the 1980s Brady Plan, substituting high-cost sovereign debt with low-cost bonds with longer maturities. Statutory efforts would involve coordinating legislation in jurisdictions like the UK and New York to encourage private sector participation in debt workouts.
• Private creditors now hold more than 25% of the external debt stock, an increase from 10% in 2010. For low-income countries, the cost of servicing this private sector debt accounts for more than two-thirds of total debt service payments.

APA

South African Institute of International Affairs (n.d.). Copy of Policy Note 1. https://saiia.org.za/wp-content/uploads/2024/09/SAIIA_PN_3_G20DebtGSDR.pdf

Chicago

South African Institute of International Affairs. Copy of Policy Note 1. n.d. https://saiia.org.za/wp-content/uploads/2024/09/SAIIA_PN_3_G20DebtGSDR.pdf.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Copy of Policy Note 1 |url=https://saiia.org.za/wp-content/uploads/2024/09/SAIIA_PN_3_G20DebtGSDR.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairsndcopy, author = {{South African Institute of International Affairs}}, title = {{Copy of Policy Note 1}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2024/09/SAIIA_PN_3_G20DebtGSDR.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }