V20 communiqué analysis Annual Meetings 2025
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Article summary
The Vulnerable Twenty (V20) Group’s 15th ministerial dialogue took place on 18 October on the sidelines of the World Bank and IMF Annual Meetings. The V20 Group represents 74 climate-vulnerable developing countries, with a total population of 1.81 billion. In this year’s Annual Meetings communiqué climate-vulnerable countries rebuked austerity-based response to debt crisis, as their climate needs remain largely unfinanced.
The V20 Group’s Annual Meeting’s ministerial, entitled “The Debt-Growth Agenda: Unlocking Fiscal Space for Climate Prosperity and Resilience,” took place amid serious headwinds with regard to the bloc’s ongoing mission to put climate at the heart of a reformed international financial architecture, of which the World Bank and IMF form a key pillar.
After US Treasury Secretary Scott Bessent repeated his calls for the Bretton Woods Institutions (BWIs, the Bank and Fund) to deprioritise climate change within their work in a statement released on 15 October, voices from the frontlines of the climate crisis strongly rebuked this call.
In a televised address to the ministerial, Barbados Prime Minister Mia Mottley highlighted the overlapping challenges faced by many V20 countries, including an escalating climate crisis, debt distress and fragile health and education systems – all exacerbated by a lack of global leadership to address these significant challenges. The views of Barbados, which currently holds the bloc’s presidency, were echoed by numerous other V20 countries at the ministerial, with speakers illustrating the growing overlap between climate impacts and constrained fiscal space.
“The global financial system was not built for this moment,” Mottley said. “We all know that.”
“For too long, debt sustainability has been defined through a narrow lens of austerity, rather than growth-generating investment that builds fiscal space,” Mottley continued. “After every hurricane that wipes out a school or a hospital, every drought that destroys livelihoods, we rebuild, we re-borrow, we tighten [our government spending] and we repeat the cycle. The debt sustainability framework which still governs international lending underestimates the cost of the climate crisis…Austerity does not deliver resilience, investment does” (see Observer Autumn 2025, Summer 2025).
Mottley’s sentiments were also echoed in the V20 Group’s communiqué itself, which noted the systemic barriers to finance the bloc’s countries face, observing that, “The current state of access to and volume of financing perpetuates inequality, blocking pathways to resilience, economic transformation, and climate prosperity.” The V20 attributed this to a high cost of capital faced by many countries, due to – inter alia – foreign exchange rate volatility, an inadequate global financial safety net, and “unchecked issues and biases which continue to plague credit rating agencies.”
Rising tide of debt threatens to engulf V20 countries
The communiqué noted the surging debt load V20 countries collectively face, due not only to the climate crisis, but their relatively marginalised place within the global financial architecture, observing that, “From 2025 to 2031, V20 countries are on track to spend a cumulative US$746.1 billion on external sovereign debt service payments and IMF repurchases and charges.”
The bloc argued for the need to restructure this debt in order to make it sustainable, including by extending repayment terms to 40 years, which on its own “could reduce payments by US$267 billion.” In this vein, the V20 called for improvements to the G20 Common Framework, including “an automatic two-year standstill on debt payments, with no arrears. This will accelerate restructuring and ease immediate fiscal pressure.”
The V20 also called for the World Bank and IMF to adopt a much more comprehensive approach to debt sustainability assessments (DSAs), amid the BWIs’ current revision of their DSA approach in low-income countries (see Inside the Institutions, Debt sustainability framework for LICs). The communiqué notes, “enhanced DSAs should clearly reflect the financing terms that permit these investments to be macro-feasible, setting out the full financing mix required, including both private and public capital, strategic debt relief, credit enhancements, and the volume of concessional capital needed for countries to meet the Paris Agreement and 2030 Agenda – to maintain debt sustainability. At present, these insights are buried in technical annexes, when they should be guiding global action.”
The group also backed IMF gold sales, in order to replenish the IMF’s Catastrophe Containment and Relief Trust, which provides debt relief on IMF loan repayments when countries experience external shocks, including natural disasters – but which was depleted during the Covid-19 pandemic. The V20 noted, “The IMF should take advantage of the historically high gold prices by selling a portion of its gold reserves to create an endowment account that would generate a sustainable revenue stream for the CCRT. CCRT could play an important role in reducing debt servicing obligations for climate-vulnerable economies facing climate impacts.”
Lack of meaningful governance reform at BWIs remains an open wound for climate vulnerable countries
Reflecting a point also highlighted by Mottley and other speakers at the ministerial, the V20’s communiqué opined that, “Recognition of the V20 within the IMF and World Bank is essential to ensure that decisions on finance and stability reflect the realities of the world’s most climate-vulnerable economies.”
With the IMF executive board set to make proposals on possible quota realignment by the 2026 Spring Meetings, the communiqué noted, “We urge the IMF Executive Board to promptly advance quota share realignment, including a new quota formula, under the 17th General Review of Quotas. To enhance the IMF’s democratic legitimacy, we call for at least a doubling of basic votes to restore historical balance” (see Briefing, A way out for IMF reform).
The World Bank’s own shareholding process is also ongoing, with possible shareholding adjustments also scheduled to be put forward within the coming six months (see Inside the Institutions, The World Bank shareholding review – reform or ritual?).
