The G20 Global Sovereign Debt Round Table held a special workshop on Addressing Liquidity Challenges. Matthew Martin spoke at the workshop, emphasising that this is a debt service not a liquidity crisis, and the degree to which debt service is crowding out SDG spending, and that this will continue over the next decade so cannot be solved by short-term service reprofiling. He also made three proposals to deal with high debt service in 3 groups of countries (MACs, LIDCs and disaster-hit countries), all of which are explained in detail in a briefing paper Solving the Debt Service Crisis: Three Proposals, which can be found here.

DFI, NYU CIC Pathfinders, Oxfam and UNAIDS, has been going from strength to strength. The World Bank has already agreed to include the monitoring of the Gini coefficient in its corporate scorecard, through an indicator which will monitor whether it reduces the number of countries with very high inequality (a Gini of 0.4 or higher) from 52. The UN Inter-Agency Expert Group has also chosen the campaign’s suggestion of the Palma The campaign to Save SDG-10 by reinforcing the indicators used to monitor inequality, jointly chaired by DFI, NYU CIC Pathfinders, Oxfam and UNAIDS, has been going from strength to strength. The World Bank has already agreed to include the monitoring of the Gini coefficient in its corporate scorecard, through an indicator which will monitor whether it reduces the number of countries with very high inequality (a Gini of 0.4 or higher) from 52. The UN Inter-Agency Expert Group has also chosen the campaign’s suggestion of the Palma Ratio as one of 15 changes to the SDGs submitted to an open consultation which ended on August 15, and final decisions on whether it will be included will be made by October.

FES convened an informal “Chatham House rules” meeting on how to Fund the SDG Stimulus through Debt Relief. It was moderated by Navid Hanif, the Assistant Secretary General for Economic Development in UNDESA, the speakers were Matthew Martin of DFI and Betty Wainaina of UNY-CIC, and officials representing 15 PR offices attended. The meeting discussed how debt relief could fund the UN Secretary General’s proposals for the SDG Stimulus, which measures should be taken to achieve this via the G20 and UNFfD processes, and how these could be achieved over the next 16 months. Matthew's presentation is here.

FES and Jubilee USA organised a seminar with IMF and World Bank Executive Directors and senior staff in Washington DC, to discuss the recent set of studies on how to reform Debt Sustainability Analysis. The four studies are by Martin Guzman and Jo Stiglitz (The Practice of Sovereign DSAs), Gail Hurley (How Transparency Makes DSAs a Trusted and Effective Tool), Matthew Martin (How to Ensure DSAs Accelerate Sustainable Development) and Sherilynn Raga (An Appraisal of DSAs Amid Multiple Crises). Twenty-two Executive Board offices were represented. The Board members and staff generally received the studies very positively, and indicated that they will be valuable inputs to the current review of the LIC-DSF and any future review of the SRDSF. The four studies are published here.

Matthew Martin spoke in the plenary session on debt at the FFD Preparatory Conference for the FFD Summit to be held in 2025, held in Addis Ababa. His speech highlighted the depth and breadth of the worst ever debt crisis for countries of the global South, and made 5 practical recommendations from the July 2024  Norwegian Church Aid report  to help countries hit by natural disasters, lower-income and market-accessing countries to reduce their debt service burdens sharply during 2025-30; and to reform the Common Framework so that it targets a level of 10% external debt service/revenue from year 1 of a debt relief agreement. These practical steps could save US$847 billion a year for spending on the SDGs, 60% more than the amount the UN Secretary General requested to fund the SDG Stimulus.  In addition, to slow the next debt crisis, he proposed the adoption of a protocol to the UN Convention Against Corruption, preventing enforcement of predatory debt.

The two debt sustainability studies prepared by Gail Hurley and Matthew Martin for Friedrich Ebert Stiftung were discussed in a side-event on Debt Sustainability Assessments and their Role in the International Financial Architecture at the Addis Ababa FSD Prepcon on 23 July. Very useful comments were provided by Robert Powell, IMF Representative to the UN in New York; Volker Hey of the BMZ; Patricia Miranda of LATINDADD; and the South African Ambassador to the UN in New York, Mathu Joyini. The studies were well received, and the ensuing discussion focussed on how to make debt sustainability assessments more SDG-linked and transparent, and use them to help return countries’ debt service to sustainable levels.  The two studies are available here.

The updated 2024 version of the Norwegian Church Aid study – Resolving the Worst Ever Global Debt Crisis – was launched at the Addis FFD conference. Its main findings are that average debt service to revenue and expenditure ratios have risen by 5% to 42% and that 91 countries will continue to have very high debt service for the next decade. It, therefore, makes proposals for differentiated debt relief to help countries hit by natural disasters, lower-income and market-accessing countries to reduce their debt service burdens sharply during 2025-30; suggests comprehensive reforms to the Common Framework and other legal and normative measures to be pursued in FSD and UNCAC, as well as laying out a roadmap for ending the debt crisis by the end of 2025. The study is available here, and a Guardian article covering it here. The full 2024 Debt Service Watch database will be published in October.

To support the debt workstream of FSD Conference preparation, FES and UNFSDO organised the latest in a series of meetings to gather high-quality policy proposals to maximise debt sustainability and fund SDG investments. Matthew Martin spoke in Session 1: Sustainable and responsible borrowing and lending, and debt crisis prevention. He emphasised that we are way beyond the stage where short-term rescheduling or reprofiling of debt service will work (only Tajikistan and Uzbekistan have a short-term debt service problem this could resolve), and stressed the need to cancel debt service for countries hit by natural disasters; reform DSAs so that they include top-priority SDG spending needs and their positive effects on growth, agree in UNCAC to prevent enforcement of predatory debt or restructuring agreements, and enhance accountability of debt policies to parliaments and citizens in the global North and South. The discussion also focussed on reforming credit ratings, regulating bond issuance, and the need for a Framework Debt Convention to enhance the UN’s role in norm-setting on debt issues.

Matthew Martin attended the FES End the Debt Trap: Options for National Legislative Action Side Event at the Addis Ababa Financing for Development Preparatory Conference on 20 July. Co-chaired by Paola Subacchi and Martin Guzman, It discussed fascinating case studies of Argentina, Ecuador, Ghana, Germany, Jordan, Kenya, Pakistan, South Africa, Sri Lanka, Tunisia, the United States and Zambia, and drew conclusions about the best way to take forward national-level action by parliaments to hold the executive branch of government accountable. Matthew contributed some comparative lessons from the IBP project on Debt Accountability to Domestic Stakeholders, and some information on prospects for Legislation on International Debt Relief in the United Kingdom. The studies will be published later in the year.

The 2024 database for the Commitment to Reducing Inequality Index has been completed, after a six-month process of data compilation and checking, expanding the number of countries covered to 164 from 161 in 2022 – with the addition of Iraq, Montenegro and Somalia. The joint DFI-Oxfam team is now in the process of writing the analytical report based on the index results, which will also contain a special thematic chapter analysing what the IMF, United Nations and World Bank should do now to enhance their work to help countries reduce inequality. The report will be launched at the IMF-World Bank Annual Meetings in October.