Civil society demands unconditional debt relief in Jubilee year
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Article summary
- In critical Jubilee year, civil society calls for a UN-led sovereign debt workout mechanism at FfD4
- BWIs’ key shareholders water down final outcome document to keep their grip on the international financial architecture
- With debt relief increasingly urgent, civil society is exploring new approaches to shift power away from creditors
In a critical year for the Jubilee campaign, the Fourth UN Financing for Development Conference (FfD4), held in Seville from 30 June to 3 July, intensified concerns over the concentration of decision-making power in sovereign debt governance (see Observer Spring 2025). Civil society groups and blocs of developing countries have called for a shift away from creditor-led restructuring processes and toward a UN-led sovereign debt workout mechanism, where all countries participate on equal footing.
Yet these demands were diluted in the 17 June final outcome document, the Compromiso de Sevilla, following resistance from major creditors, including the EU and the UK. Even with its weakened language, the document faced backlash: the US withdrew from negotiations, arguing, according to Devex, that the outcome “improperly seeks to usurp the existing governance role of international financial institutions” while other key shareholders of the Bretton Woods Institutions (BWIs), including Canada, Japan and the EU, dissociated from the language on an UN intergovernmental process on debt in the final text.
FfD4 took place amid ballooning debt service costs and the declaration of a Jubilee year by the late Pope Francis – now supported by his successor, Pope Leo XIV – calling not only for debt relief but for a broader rethinking of the global economic system “to guarantee the dignity of the human person and the common good.” In 2024, German civil society organisation (CSO) Erlassjahr’s Global Sovereign Debt Monitor, found that 130 out of 152 Global South countries were in debt distress, with 55 per cent of them classified as critically or very critically indebted. According to the World Bank’s International Debt Report, developing countries spent $1.4 trillion servicing external debt in 2023, with interest payments alone increasing by nearly a third to $406 billion, the highest in two decades (see Observer Winter 2023).
The World Bank noted that these payments are “squeezing the budgets of many countries in critical areas such as health, education, and the environment.” UNCTAD’s A World of Debt report found interest payments now outpace spending on essential services in many countries, with 3.3 billion people living in states that allocate more to interest than to either education or health (see Observer Summer 2025).
Calls for a UN-led debt workout mechanism remain unmet
In May, the African Union hosted its first continental Debt Conference in Lomé, Togo, concluding with a call for African nations to push for a UN framework convention. This built on the Africa Group’s inputs to FfD4, which proposed establishing “a multilateral sovereign debt workout mechanism” overseen by a global debt authority. While eventually voted down by the Parliament, the European Parliament’s Development Committee also supported an intergovernmental approach to debt governance ahead of FfD4. Similarly, the Alliance of Small Island States (AOSIS) stated in April 2024 that “there must be debt workout mechanisms for the most at-risk.”
Yet while paragraph 50(f) of the Compromiso references initiating an intergovernmental process at the UN, the language strips away any binding commitments, replacing them with vague aims to “make recommendations” and “explore options to address debt sustainability,” calling for a “dialogue” involving UN Member States, the Paris Club, official creditors and debtors, the IMF, World Bank, other multilateral development banks, private creditors and other relevant actors.
Patricia Miranda, of the Latin American Network for Economic and Social Justice (Latindadd), stressed: “Northern countries were determined to scale back ambitions at FfD4, proving that a reform is not only necessary – it is urgent. Only a UN Framework Convention on Sovereign Debt, with a multilateral debt resolution mechanism, can deliver sustainable and fair solutions under democratic governance, where all voices count.”
G20 and IMF’s grip on debt governance
These calls challenge current sovereign debt governance, where creditors hold decision-making power and key mechanisms like the Paris Club and the G20 Common Framework fail to deliver timely and equitable debt restructuring (see Observer Spring 2024, Spring 2023, Winter 2020).
The BWIs, particularly the IMF, are key actors in this system. The Fund’s Debt Sustainability Analyses (DSAs) carry significant weight across the financial system, informing not only IMF and World Bank lending decisions and private creditors’ risk assessments, but also potentially triggering restructuring requirements as a condition for IMF lending (see Observer Autumn 2023, Autumn 2022). As Professor Ahilan Kadirgamar from the University of Jaffna in Sri Lanka argues, “there is clearly a conflict of interest in the IMF’s role as a lender and an arbiter.”
As a result, the Fund’s assessments display a tendency towards over-optimistic projections and fiscal consolidation measures that reduce the policy space needed for development finance, much less economic transformation (see Observer Spring 2023). In its contribution to FfD4, the IMF acknowledged that achieving the Sustainable Development Goals by 2030 “appears increasingly unlikely,” yet still deems most countries’ debt ‘sustainable’ – portraying the growing chasm between its definition of sustainability and actual development financing needs – reinforcing UNCTAD’s call for a more development-oriented debt architecture.
Recent research from Boston University’s Global Development Policy Centre Center called for urgent debt relief to enable climate and development goals, showing that if IMF debt assessments included climate and development spending, 41 of 62 countries studied would exceed solvency limits by 2028. Even the World Bank’s chief economist argued, “It’s time to face the reality: the poorest countries facing debt distress need debt relief if they are to have a shot at lasting prosperity.”
A Jubilee moment?
Amid the critical Jubilee year, the late Pope Francis’ Jubilee Commission – comprised of over 30 experts chaired by Joseph Stiglitz – released a report on 20 June calling for debt relief and reforms aimed at addressing the debt crisis and preventing its recurrence. While stopping short of endorsing a UN-led mechanism, it urged changes to IMF and World Bank policies to support sustainable recoveries, “not de facto bailouts of private creditors or crippling austerity.” Yet with many FfD4 proposals focused on ‘conditional’ debt relief or other suspension initiatives – such as climate-linked pause clauses and Spain’s push to establish a global debt swap hub, which CSOs have criticised – systemic reform of debt governance is elusive.
Fadhel Kaboub of the Global Institute for Sustainable Prosperity, and Andrés Chiriboga-Tejada, a postdoctoral researcher at UNAM’s Institute for Economic Research, who recently analysed the challenges and possibilities for debtors’ collective action in a report for the South Africa-based Institute for Economic Justice, argue, “Stalled reforms and the need for immediate debt relief urge coordinated action among indebted countries. The Global South should use its collective market size, natural resource wealth, and labour force as leverage for a ‘Bargain of the Century’ – one that demands technology transfers and industrial investment from major economic players. This bargain could initiate a new era of South–South and South–North cooperation based on mutual benefit rather than asymmetric power dynamics.”
