FfD4 3rd PrepCom side event: Resolving the Morass - UN Expert Group on Debt Solutions for Africa and SIDS

Debt has taken a central stage at the Fourth Conference on Financing for Development (FFD4), where the issue of debt and development is at a fever pitch, demanding urgent and decisive action. Developing nations face mounting debt challenges as unsustainable external debt service now consumes 14% of revenue for the median low-income country—over 2.5 times the level a decade ago—often surpassing spending on health, education, and other essential services. This unsustainable burden is driven by net financial outflows, where new financing is frequently diverted to service external debt. This is both an issue of less money flowing in, as FDI and portfolio investment have declined sharply, but also an issue of more money flowing out of these countries; both measured as the share of external debt service to exports and government revenues. According to UNCTAD calculations, two thirds of developing countries experienced deterioration of their external debt sustainability between 2017 and 2023 as debt service grew twice as fast as their export and remittance earnings. 

The outlook remains bleak. With principal repayments set to more than double in 2025 compared to the previous decade's average, these trends demand not only solutions to short-term liquidity challenges but also strategies to address debt sustainability, secure large-scale affordable financing, and promote inclusive growth. And while Multilateral Development Banks (MDBs) and International Financial Institutions (IFIs) serve as a lifeline for affordable financing to developing countries, their efforts are insufficient to offset high debt service costs and bridge the exorbitant development financing gap. Even more troubling, stagnant growth prospects and rising fiscal pressures further exacerbate the challenges, threatening long-term development goals and progress toward the SDGs.

Against this backdrop, African countries and Small Island Developing States (SIDS) are disproportionately affected by the debt crisis, which is further exacerbated by climate change. Recognizing the urgency of this issue, the United Nations Secretary-General announced the establishment of a Group of Prominent Experts on 6 December 2024. The Group has been tasked with advancing actionable policy solutions, mobilizing political and public support, and contributing substantively to the preparations for the Fourth International Conference on Financing for Development (FfD4).

Objective: 

This high-level side event aims to:

1. Convene the Expert Group alongside member states to discuss innovative, actionable solutions to the intertwined challenges of debt and development.
2. Distinguish between short-term solutions to liquidity challenges and effective long-term mechanisms for dealing with unsustainable debt while debating strategies for building sustainable debt management practices.
3. Highlight Africa and SIDS-specific issues, ensuring their perspectives and priorities are central to the FfD4 discussions and reforms to the global debt architecture.
4. Foster dialogue among key policy makers and stakeholders to build momentum and consensus on addressing the debt crisis effectively.

Structure and Format:

Panel discussion to be moderated by Penelope Hawkins, Head of Debt and Development Finance Branch, UNCTAD

Panelists:

• Prudence Kaoma, Permanent Secretary, Ministry of Finance and National Planning, Zambia
• H.E. Ali Naseer, Permanent Representative of the Maldives to the United Nations, New York
• Mahmoud Mohieldin, Chair of the Expert Group and UN Special Envoy on Financing the 2030 Agenda
• Trevor Manuel, Expert Group Co-Chair (Virtual)
• Yan Wang, Expert Group Co-Chair (Virtual)

Participation

This side-event is open to all participants of the 3rd Prep Com.

Registration

Online registration is mandatory for all those wishing to attend the meeting.

Only accredited organizations may register.