Many developing countries are experiencing rising debt vulnerabilities that divert scarce resources away from essential development priorities such as health, education and infrastructure, Finance Deputy Minister David Masondo has said.

He addressed delegates at the UN’s fourth International Conference on Financing for Development (ICFD), in Spain, on July 1.

Masondo’s address, which related to achieving debt sustainability in developing countries, offered an important opportunity to deepen the global discussion on relieving growing debt burdens in developing countries.

He highlighted that serious conversations about development in these countries cannot be held without addressing the rising sovereign debt crisis.

Both South Africa and Spain have placed debt sustainability high on the global agenda – under South Africa’s G20 presidency and Spain’s hosting of the ICFD.

Masondo called for renewed global support for tackling debt sustainability and for international actors to identify and align efforts on debt relief initiatives for vulnerable countries.

South Africa, at a broader level, is advocating a comprehensive and multi-pronged approach to debt sustainability that includes improving the effectiveness of debt restructuring, supporting liquidity-challenged countries, promoting local currency bond market development, advancing debt transparency and exploring new debt instruments such as debt-for-nature swaps and climate-resilient debt clauses where appropriate.

“We have also prioritised giving debtor countries a stronger voice. For instance, in collaboration with the African Development Bank, we hosted a side event in March that brought together various African borrower countries to directly share their perspectives on debt sustainability with G20 stakeholders,” Masondo stated.

He continued that South Africa’s focus is on improving the implementation of the Common Framework for Debt Treatments through actions such as publishing a step-by-step guide to the debt restructuring process under the Common Framework to improve speed and predictability.

South Africa has also issued factsheets on the Common Framework cases of Chad, Zambia and Ghana to enhance transparency.

The guide and fact sheets are available on the G20 website.

Masondo said that while these are important steps, much more needs to be done.

He concluded that global contributions help build progress and define further steps to support debt sustainability for developing nations.