There is growing momentum for a reform of the international sovereign debt architecture. In recent weeks, a series of high-level meetings and reports—from the Financing for Development Conference in Seville to the launch of the Vatican-backed Jubilee Report—have advanced the debate and echoed proposals long advocated by the Debt Relief for a Green and Inclusive Recovery (DRGR) initiative.
BY SARAH RIBBERT (PROJECT COORDINATOR)
Dear Reader,
There is growing momentum for a reform of the international sovereign debt architecture. In recent weeks, a series of high-level meetings and reports—from the Financing for Development Conference in Seville to the launch of the Vatican-backed Jubilee Report—have advanced the debate and echoed proposals long advocated by the Debt Relief for a Green and Inclusive Recovery (DRGR) initiative.
The Compromiso de Sevilla
The Fourth Financing for Development Conference (FfD4) marks a significant moment. Despite political turbulence—including a U.S. walkout—the Compromiso de Sevilla (Seville Commitment) was surprisingly adopted in a preparatory meeting in New York ahead of the conference. This early consensus is a positive sign for multilateralism and demonstrates that agreement is still possible—even on complex and contentious issues like debt reform.
Countries of the Global South were central to the negotiations. The African Union, Small Island Developing States (SIDS), Pakistan, and others strongly pushed for the creation of a multilateral mechanism to prevent and resolve sovereign debt crises—calling for binding international rules to govern restructuring processes and clarify the roles of debtors and creditors. While these structural demands were included in early drafts of the text, they were ultimately diluted in the final outcome due to resistance from actors including the EU, Japan, and Australia. The compromise language now refers only to a process that will make recommendations on existing gaps in the debt architecture.
This softening of ambition represents a missed opportunity to confront the systemic weaknesses of the current debt system. Yet, the fact that a consensus document was achieved at all—despite considerable geoeconomic tensions—remains a positive sign. It shows that multilateralism is still functional, and that progress on debt is not out of reach.
Importantly, the outcome still contains several constructive provisions: the establishment of a debtor coordination platform (or borrower club), a UN working group on responsible sovereign borrowing and lending, the inclusion of climate-resilient clauses, the operationalisation of a debt sustainability support service for SIDS. These steps are encouraging but don’t go far enough. A recent op-ed by DRGR Co-Chairs María Fernanda Espinosa and Shamshad Akhtar, with Ameenah Gurib-Fakim, former President of Mauritius and member of the African Leaders Debt Relief Initiative (ALDRI), argues that these efforts will fall short without a comprehensive mechanism for debt relief that deals with the high debt burdens in the short and medium term.
The Vatican and the Moral Imperative for Reform
At the same time, the case for a new round of ambitious debt relief—akin to the Heavily Indebted Poor Countries (HIPC) Initiative—was revitalized in the new Jubilee report that was authored by the Jubilee Commission instigated by the late Pope Francis and produced by the Academy of Social Sciences in the Vatican in partnership with Columbia University’s Initiative for Policy Dialogue. DRGR Co-Chair Jörg Haas participated in a day-long seminar in the Vatican that discussed the proposals of the report.
In an Op-Ed in the Economist, the report’s main authors Nobel laureate Joseph Stiglitz and Martin Guzman make a compelling call for a modernized HIPC II, aligning closely with DRGR’s long-standing recommendations. It advocates tailored restructuring strategies, including maturity extensions, interest rate reductions, and principal haircuts. It also calls for an end to bailouts for private creditors, as well as legal reforms in key jurisdictions like New York and London to help accelerate restructuring processes and reduce the incentives for creditors to delay action.
Aligning Global Agendas: Debt Sustainability, Climate Action, and the G20
This growing momentum is also reflected in DRGR’s continued presence at key international forums. In the lead-up to the G20 Leaders’ Summit in October—hosted under the presidency of South Africa—DRGR co-chair Ulrich Volz presented the state of the sovereign debt crisis to a roundtable of G7 and G20 ambassadors, hosted by SOAS University of London. The event underscored the urgency of aligning global financial reforms with development needs and laid the groundwork for more ambitious debt outcomes later this year.
Meanwhile, during London Climate Action Week, DRGR and the SOAS Centre for Sustainable Finance convened a prominent event on “Reversing the Vicious Cycle of Debt, Underdevelopment, and Environmental Change.” The discussion, moderated by DRGR co-chair María Fernanda Espinosa, highlighted how unsustainable debt burdens are increasingly obstructing climate action and sustainable development. Panelists included Sara Jane Ahmed (V20), Ritu Bharadwaj (IIED), Jamie Drummond (Sharing Strategies), Hannah Ryder (Development Reimagined) and Ulrich Volz (SOAS University of London).
This message—that integrated debt and climate solutions are essential to fulfilling the promises of the Paris Agreement and the SDGs—will also be at the heart of several upcoming speaking engagements by DRGR Co-Chairs María Fernanda Espinosa and Ulrich Volz at the FfD4 Conference in Seville, underscoring the growing recognition of this urgent policy nexus (see overview of events at the end).
A Critical Juncture
Finally, the recent release of the report of the UN Secretary-General’s Expert Group on Debt headed by Mahmoud Mohieldin further reflects a convergence around several of DRGR’s recommendations—such as debt service suspensions during crises, reforms to debt sustainability assessments, and the creation of a borrower forum. Although it falls short of calling for a full-scale debt relief initiative, the report makes the case for comprehensive reform of the Common Framework.
All of these developments—at the UN, the Vatican, the G20, and climate-focused forums—point to a growing consensus: the international debt system is no longer fit for purpose. As the effects of the climate crisis, global inequality, and geopolitical instability converge, the time for action is now.
DRGR welcomes this momentum and remains committed to working with allies across sectors to push for a debt architecture that is just, climate-smart, and development-oriented. The building blocks are increasingly coming together. What is needed next is political will—and bold implementation.
Join our co-chairs at the following events at FfD4:
29 June 16:25–16:50, Side Event “Reimagining Global Cooperation: from Aid to Dependence to shared Prosperity” by Global Citizen.
1 July 14:30–16:00, Side Event “Financing Women for a Fair Future: Alternatives to retool development and reform dinance from a women’s rights perspective“; by GWL Voices, Government of Spain, Association of Caribbean States, Club de Madrid.
2 July 10:30–12:00, Side Event: “Unlocking the virtuous circle: from financing for development to financing from development” at the FfD4. Co-sponsored by UNCTAD and the Nizami Ganjavi International Center.
2 July 10:30–12:30, Roundtable on “Swapping out Debt for Development: The Debt for Climate Swaps Financing Approach”, Hilton Garden Inn Sevilla.
2 July 12:30–14:00, Side Event “Strengthening Principles for Global Cooperation in the FfD4 Outcome Document” by Global Public Investment Network (GPIN) and the Impact Coalition for IFA Reform. Side Event Room 19, FIBES Conference Centre.
2 July 12:30-14:00 Side Event “Universal Principles for Lending and Borrowing: Design and Road for Implementation”. Jointly organised by German Institute of Development and Sustainability (IDOS), SOAS Centre for Sustainable Finance, Institute for Economic Justice South Africa, Global Solutions Initiative, Global Policy Forum Europe, Germanwatch. Room 23, FIBES Conference Centre.
After FfD4, DRGR Co-chair Shamshad Akhtar will deliver a keynote speech on “Debt, climate, and development in the Asia Pacific: Breaking the vicious circle” at the upcoming ADB-ADBI-SOAS conference on “Accelerating Climate Action in Asia – Fiscal Policy Solutions” in Tokyo from 9–10 July.