BANGKOK, Thailand, Jan 09 (IPS) – The credit crisis is back. Indeed, the aid organization Cafod reports that developing countries today are facing “the biggest debt crisis in history”.
At least 54 countries are in debt crisis – double the number in 2010. Another 57 countries are at risk of debt crisis. Over the past decade, interest payments in developing countries have increased by 64%, and in Africa by 132%.
African countries pay more than 100 billion dollars a year to creditors. The share of African countries’ budget that pays debts is four times higher than in 2010.
Net income to developing countries is now negative – that is, debt service payments are now higher than income for governments.
“It’s time to face the facts,” said World Bank Chief Economist Indermit Gill. “The poorest countries facing debt stress need debt relief to have a chance at sustainable prosperity. Private creditors should bear a fair share of the costs if bets go wrong.”
“Debt is suffocating the countries of the Global South,” said the Anglican Archbishop of Cape Town Thabo Makgoba, “denying us what we need in terms of health and education. Let’s breathe, please!”
The magnitude of the crisis did not shock world leaders into action, however. So far, the G20’s debt restructuring measures have not come close to what is needed.
The resurgence of the debt crisis is even mockingly suggested as a reason not to solve it. “They were forgiven for their debts in 2000,” says the mantra, “now they are back, which means they have failed and there is nothing to help them.”
It is a false story that deliberately ignores two important points: first, that the debt cancellation achieved by the Jubilee 2000 broad movement saved and transformed millions of lives, including in affected countries from a majority of children who do not complete primary school to a majority of children who do; secondly, that the changes necessary to prevent a recurrence of the payment levels of catastrophic debts are held by creditors.
But the untruth has not taken away the power of the “debt cancellation” story by justifying and allowing unemployment.
Debt restructuring has continued to be a painfully slow, ad hoc process, dominated by rich countries and dependent on lobbying by debtors. That’s not a bug, it’s a feature. It is not surprising that private lenders, who today make up a large part of the debt lenders of the affected countries, have blocked efforts to solve the problem: without enough pressure that is what they will continue to do.
It seems needless to add that we have now entered an era where anything requiring international cooperation has become more difficult. And yet, 2025 also brings two powerful reasons for hope.
First, a minute.
As the first African chair of the G20, South Africa took the opportunity to lead the campaign of government agencies to take action on debt, and successfully bring it to the core of the global economic network. South Africa’s presidency of the G20 has set a bold agenda that prioritizes tackling what they bluntly call “crippling debt levels that are forcing many countries to sacrifice their development commitments to pay off unmanageable debts”.
South Africa has set out a framework that will be a turning point for the delivery of the G20: “We must take action to ensure debt sustainability in low-income countries.” A key obstacle to inclusive growth in developing economies is chronic debt levels that limit their ability to invest in infrastructure, health care, education and other developmental needs”.
“South Africa will strive to advance sustainable solutions to address high structural deficits and the challenges of insolvency and to extend debt relief to developing countries. South Africa will also seek to ensure that sovereign credit ratings are fair and transparent and to address the high risk defaults of developing economies. The key to dealing with the debt question is dealing with the Cost of Capital.”
Second, movement.
Intergovernmental diplomacy alone, however well played, cannot bridge the power imbalance in global finance. Solving the debt crisis requires a determined and organized movement of people. This movement is rising.
Among those joining the wider Jubilee 2025 movement are civil society organizations ranging from climate justice marchers to human rights activists, labor unions from all walks of life and the world, and artists raising their voices to end debt fraud.
In the wake of the Jubilee of 2025 religious communities, which were also at the center of the Jubilee of 2000. As Jubilee’s name implies, debt cancellation is not just a technical economic issue, it is a moral issue, with deep biblical roots. culture and understanding of social ethics.
“We urgently need a new Jubilee of credit,” interfaith leaders from across Africa declared in their joint call to action, “to bring hope to humanity, and bring the world back from the brink.” Communities of faith combine deep local planning and extensive global connections, congregate in the Global South and Global North among the most excluded and among the better off, and have proved very difficult for decision makers to ignore.
A moment of hope, powered by a movement of hope. Debt stress doesn’t have to be fate. This is not a prediction that the credit campaign will succeed, but it is an assessment of whether it has a fighting chance. “More than a question of charity,” Pope Francis said in his 2025 Papal Bull, debt cancellation “is a matter of justice.”
Significantly, he named the document Spes non confundit – “Hope does not disappoint.”
Ben Phillips author of How to Fight Inequality.
IPS UN Bureau
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© Inter Press Service (2025) — All Rights ReservedOriginal source: Inter Press Service
