G24 warns debt burden threatens growth across developing economies
Developing economies face rising pressure from heavier debt loads and higher borrowing costs as global shocks strain public finances. G24 Chair Taiwo Oyedele says the imbalance is limiting inclusive growth and leaving vulnerable countries with fewer resources for investment and job creation.
Highlights
- Developing nations are paying about $500 billion more annually in debt service costs compared to developed countries, according to G24 chair Taiwo Oyedele.
- G24 highlights that high debt levels and elevated servicing costs, especially in Africa, are constraining inclusive and job-rich economic transformation.
- G24 urges the IMF and World Bank to expand access to concessional financing as supply shocks, food price hikes, and higher borrowing costs intensify fiscal pressure in 2024.
Debt costs rise amid fiscal strain
As reported by Reuters, Taiwo Oyedele, chair of the Group of 24 nations, says many developing countries are paying far more to service debt than advanced economies as widening fiscal deficits add to the pressure. Speaking at the annual meetings of the International Monetary Fund and World Bank in Bangkok, he says estimates show developing nations are paying about $500 billion more for their debt than developed countries.Oyedele, who is also Nigeria's minister of finance and coordinating minister of the economy, says G24 members and other developing countries, particularly in Africa, are contending not only with high debt levels but also with elevated debt costs. He says those conditions are becoming a major barrier to inclusive and job-rich economic transformation.
Heavily indebted countries are under added strain this year from supply shocks linked to the ongoing war in the Middle East, rising food prices associated with a super El Niño and sharply higher borrowing costs. G24 members are urging the IMF and World Bank to expand access to affordable concessional financing in the near term as governments try to mobilise private capital and curb public spending.
In our earlier article on the IMF’s Global Financial Stability Report and rising sovereign bond yields, we explained that government borrowing costs in several advanced economies have climbed to multidecade highs amid high debt, inflation risks, and energy-price pressures. We also noted the IMF’s warning that these strains could lead to a sharp, disorderly jump in yields with broader spillovers, while heavy issuance from AI-focused companies may increasingly compete with sovereigns for investor demand.
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