A debt crisis is looming in the Global South. Although international capital has partially returned to developing and emerging economies, in many low- and middle-income countries debt service is impeding crisis responses and contributing to worsening development prospects and a compromised ability to adapt to the impending climate crisis as well as threatening the achievement of the SDGs.
The G20 Common Framework for Debt Treatments will not suffice to tackle the debt problem facing many developing and emerging economies. This is a systemic problem, and a global and systemic response is needed. The international community, and the G20 in particular, need to agree on an ambitious agenda for tackling the debt crisis and providing countries with the fiscal space for sustainable crisis responses.
The G20's Common Framework urgently needs to be revamped to include middle-income countries and allow for comprehensive debt relief by both public and private creditors oriented around a green, inclusive recovery. To avoid a delay of debt restructuring where it is needed, the G20 should encourage all low- and middle-income countries whose debt is considered unsustainable to participate in debt restructuring.