Sovereign debt governance at a crossroads: African perspectives on the state of debt cooperation and efforts toward a new UN convention

Debt was identified as one of the “greatest obstacles” to sustainable development—a point driven particularly by African countries — at the Fourth International Conference on Financing for Development (FfD4) under the United Nations, and the outcomes accordingly included a range of commitments aimed at addressing debt challenges.

As of the FfD Forum this month, almost one year after FfD4, the international community has begun to move from commitments to implementation of the Compromiso de Sevilla outcomes.

The Borrowers’ Forum was one of these commitments, intended to provide a space for exchanging knowledge and experience, while supporting borrower countries to coordinate approaches and strengthen their voice in the global debt architecture. This initiative was formally launched, under Egyptian leadership, earlier this month.

What remains to be clarified, however, are the next steps on the broader intergovernmental process at the UN that was mandated last year by FfD4, intended to “make recommendations for closing gaps in the debt architecture and exploring options to address debt sustainability”. This intergovernmental process was not the UN framework convention on sovereign debt that was called for by African countries and others in the Global South, but it is potentially an avenue toward it.

The urgency to improve international debt governance is deepening in a context where developing economies are allocating record-high debt repayments to creditors, often to the detriment of meeting their populations’ basic needs and sustainable development priorities.

Unsustainable debts, driven by external forces and an unfair system

The level of indebtedness faced by developing economies is deeply concerning. Currently, about half of the world’s population (3.4 billion) lives in countries where debt servicing exceeds public spending on essential social services, underscoring the severity of the trade-offs imposed by the global debt architecture. Global public debt reached a record high of $102 trillion in 2024, and the IMF expects the debt-to-GDP ratio to reach 100% by 2029. In developing economies, public debt levels have grown twice as fast as in developed countries since 2010. 

In Africa, annual gaps between revenues and expenditures of 200 billion USD are largely covered through additional debt, further exacerbating already high debt burdens. In Sub-Saharan Africa alone, 21 low-income countries have fiscal deficits exceeding the limits considered necessary to stabilize debt.

Africa’s deficits have worsened significantly since 2020, to a large extent due to externally- driven shocks — including climate change as well as the COVID-19 pandemic and the fallout from conflicts such as Russia’s war with Ukraine, Israel’s war on Gaza, and the US-Israeli war against Iran. Unfortunately, these crises are not of Africa’s making, often caused by high-income creditor countries, yet their costs are disproportionately borne in African countries. Resultant increases in energy and food prices, coupled with tighter global financial conditions driven by interest rate hikes, force countries to borrow more at higher costs.

Developing economies, it must be recalled, face an excessively high cost of capital, paying 3 times more than developed countries to access finance from international markets, often based on unfair perception of risks.

Africa’s advocacy for improved global governance of debt issues

In response to rising debts and an unfair global system for sovereign debt, Africa has consistently been among the world’s strongest advocates for change, not only for incremental reform, but for a new, binding global debt architecture — one that enforces accountability across all creditors and borrowers, centering the sustainable development needs of countries.

In addition to African leadership on the Borrowers’ Platform, the African Union made a landmark call last year for a “UN Framework Convention on Sovereign Debt”, to transform the governance of debt and provide “a more comprehensive, fair, and effective multilateral mechanism for preventing and resolving sovereign debt crises”. This Convention, African countries insisted, should be “a legally binding mechanism providing timely and adequate debt relief”, “inclusive and transparent, propose development-oriented debt sustainability assessments, address illegitimate debt and propose debt crisis prevention mechanisms”.

Such a Framework Convention would improve on the status quo — unlike corporate insolvency systems, there is currently no effective framework for sovereign debt restructuring when a country faces difficulties. Existing mechanisms, such as the G20 Common Framework, remain creditor-driven, non-inclusive, and largely ineffective, forcing countries into asymmetric negotiations that tend to prioritize creditor interests in a narrow sense, over wider mutual long-term interests.

Africa’s debt crisis stems in part from this unjust and ineffective global architecture that reinforces power imbalances and enables creditor dominance. It neither prevents the buildup of unsustainable debt nor provides rules-based mechanisms for responsible lending, transparency, or debt sustainability in a way that would integrate climate action and other sustainable development criteria.

However, efforts to secure the Framework Convention as an outcome of FfD4 were rejected by some of the main high-income creditor countries who dominate the existing mechanisms. The aforementioned mandate for an intergovernmental process reflected compromise language, though it was language that even some creditor countries choose not to associate with. 

A call to action: Toward a UN Framework Convention on Sovereign Debt

Africa’s efforts towards a UN convention on sovereign debt must be supported. This is the case now more than ever, given the struggles to finance the 2030 Agenda and Paris Agreement, amid declining grant-based support from rich countries for development assistance and climate finance.

For indebted countries, maintaining the status quo is no longer tenable. The current system constrains their capacity to cover basic social needs and even for investments in sustainable development to reduce future spending needs, preventing investments in  resilience to climate change impacts and in transitions away from fossil fuel imports.

The international community has reached a critical juncture where priorities must be reassessed: should scarce public resources continue to be directed at such scales toward servicing unfairly high debts to already rich creditors, when basic human needs and global goals for sustainable development are inadequately funded?

Across all international fora, including the Paris Agreement process with its Veredas Dialogue on Article 2.1(c), the international community must stand with African countries and the Global South in their calls for a fairer and more effective global governance of debt under a UN Convention for Sovereign Debt. 

Discussions on sovereign debt must move to a genuinely inclusive arena, and Africa recognizes that no forum is more universal or legitimate than the United Nations. A UN process would provide an inclusive, rules-based space where all member states negotiate on equal footing, addressing debt sustainability more fairly and with the challenges of sustainable development in mind.