ECOSOC FfD Forum 2024: Panel Discussion 6 on Debt and Debt Sustainability

Statement by Pedro Manuel Moreno, Deputy Secretary-General of UN Trade and Development (UNCTAD)

ECOSOC FfD Forum 2024: Panel Discussion 6 on Debt and Debt Sustainability

New York
24 April 2024

Your Excellency, Mr. Akan Rakhmetullin, Vice-President of ECOSOC and Permanent Representative of Kazakhstan,


Ladies and Gentlemen,

This panel session focuses on a topic that is at the core of many policy discussions.

With the crises that we are going through, debt continues to undermine development in many developing countries. In the past three years, the world has seen 18 sovereign defaults, the highest in two decades. A total of 34 of the poorest countries – that is more than half – are either in or at high risk of debt distress.

To put the debt burden into context, in 2022, governments of developing countries paid almost $50 billion more to their external creditors than they received in fresh disbursements. A record number of 52 countries paid more than what they received.

Weaker appetite for developing countries’ public debt from private creditors underlines this change. Between 2021 and 2022, net transfers on public and publicly guaranteed debt from private creditors switched from an inflow of over $40 billion to an outflow of nearly $90 billion.

During 2022 and 2023, external sovereign bond issuance plummeted to its lowest levels in the last ten years. The level is equivalent to one third of the peak reached in 2020, showing how fast situations can change. The decline affected most the frontier-market economies.

While some developing countries recorded strong bond issuance in the first months of 2024, these were at higher coupon rates compared to bonds currently being repaid. This will have a negative effect on already ballooning debt servicing dynamics. Again, frontier markets are affected by the biggest differentials.

These numbers and developments reflect that the debt challenges faced by developing countries are structural and systemic. Low growth, commodity dependence, illicit financial flows, climate vulnerability, volatile private capital flows, high financing costs and the absence of an effective multilateral sovereign debt resolution mechanism exacerbate debt burdens of developing countries and create large fiscal adjustments. They also put the achievement of 2030 Agenda out of reach.

To tackle systemic problems, we need systemic solutions.

From UNCTAD’s perspective, or UN Trade and Development as just rebranded, this requires a new development-centered international debt architecture, meaning:

  • One: Scaling up concessional finance and grants from multilateral and regional development banks through greater capitalisation and re-channeling of unused Special Drawing Rights to Multilateral Development Banks. This will boost public and private sector investment. In this context, it is important that the promises of the 2023 SDG Summit will be fulfilled at the upcoming Summit of the Future.
  • Two: We need enhanced international liquidity. The improved access to existing Global Financial Safety Net instruments with a focus on fairness and increased quotas for developing countries can provide crucial support. But while recent efforts in this direction are welcome, they remain insufficient.
  • Three: Greater resilience to external crises must become systemic. Implementing standstill rules that provide breathing space during crises would be an important contribution. A good example are climate-resilient debt clauses.
  • Four: Enhanced debt sustainability analysis must reflect investments in the SDGs. Country negotiators need to be empowered with technical assistance for this purpose. In addition, transparency should be a focus of every stage of the sovereign-debt cycle.
  • And five, but not least: We need to do more to make the Common Framework worthwhile for countries in distress. The problems are known, and we should do all we can to make this a more useful and more generic mechanism for debt resolution.

These are some reflections I wanted to share for this session.