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.

Our sister company Debt Relief International has been an implementing partner of the World Bank Debt Management Facility (DMF) run by the World Bank, ever since it was launched in 2008. Our phase 3 grant agreement to help the World Bank implement the programme began in January 2022, and between then and June 2024 we assisted in 10 missions, acting as one of the World Bank’s main partners in Francophone countries.

Six of these missions were Debt Management Performance (DeMPA) assessment missions, in which the mission assessed the debt management performance of the government in Burundi (June 2023), Cabo Verde ((March 2022), Madagascar (February 2023), Mauritania (November 2023), Niger (March 2022) and Togo (Sept 2022). Three of them were debt management Reform Plan missions arising out of earlier DeMPAs (Congo-Brazzaville in November 2023; DR Congo in April 2023; and Madagascar in July-August 2023); and one was a mission to help the government of Burundi prepare a Medium-Term Debt Strategy.

DRI's contribution to these missions has been productive and useful for enhancing political dialogue on debt in these countries, and strengthening their debt management capacities. Our grant expired on 30 June 2024, and we look forward to working with the Bank in future phases.

IBP and DFI jointly led a webinar to present the findings of DFI’s scoping study on how to make public debt policy decisions more accountable to domestic stakeholders, such as parliaments, audit offices and civil society. The study was commissioned by IBP and funded by the Gates Foundation. In the webinar, DFI discussed legal, institutional and political frameworks and contexts for accountability; and practical steps to improve accountability at each stage of the public debt management cycle. It particularly highlighted good practices from Benin, Burkina Faso, Ecuador, Cameroon, Jamaica, Kenya, Mexico, Norway, the Philippines, Rwanda, Uganda and Vietnam. IBP highlighted how the results of the study chimed well with their findings in the 2024 Open Budget Survey that accountability on debt and financing issues in the budget cycle is very weak, in terms of parliamentary oversight and especially public participation. The resulting publication will be appearing on this website shortly.

On 16 June DFI completed a regional report for Oxfam based on the Commitment to Reducing Inequality Index, analysing the relationship between inequality and instability in the Sahel (Burkina Faso, Chad, Mali, Niger and Senegal).  The report, Confronting Inequality and the Polycrisis in the Sahel: the Urgent Need for Progressive Policies analyses the growing inequality and instability in 2020-24. It finds that inequality is reducing growth by 5% a year, and being aggravated by high debt and defence spending, and austerity.  High levels of informality and failure to enforce formal labour rights, leave the countries at the bottom worldwide for wage inequality. They are spending far less than needed to reach the SDGs on education, health and social protection; and though their tax systems look progressive on paper, they depend far too much on collecting regressive VAT – so their fiscal systems do little to reverse wage inequality. The report urges increases in collection of progressive income and wealth taxes, as well as debt relief, to reduce inequality and instability, and reduce pressures for international migration. 

DFI has completed a study for the Sustainable Financing Initiative of the School Meals Coalition, and funded by the Rockefeller Foundation through the Education Development Center. The study looks at the potential for debt swaps to be used to fund school meals, which will be essential to increasing the numbers of children completing secondary education and reaching SDG4. The study examines prospects for debt conversions across the developing world, focusing on case studies of Ghana, Honduras, Kenya, Senegal and Sierra Leone. It finds that the prospects for debt swaps are limited, but opportunities could be expanded in several ways. It concludes that the main emphasis should be on advocating broader debt relief which could free huge fiscal space for sustainable spending on school meals. The study will be launched in September.

Gail Hurley and Matthew Martin of DFI have contributed two chapters to a forthcoming book on Debt Sustainability Assessments and their Role in the International Financial Architecture, which have now been published as separate studies. Gail’s study is on How Transparency Makes Debt Sustainability Analysis a Trusted and Effective Tool , and looks at how to make DSA tools and analysis more transparent and accessible to stakeholders, and preparation of DSAs a more participatory exercise, especially in borrowing countries. Matthew’s study is on How to Ensure Debt Sustainability Accelerates Sustainable Development, and looks at how the DSA frameworks could be modified to incorporate the spending costs, financing needs and positive growth multipliers of spending on the social and environmental SDGs.