Improving the Global Debt Architecture

Global debt surged in the wake of the COVID-19 pandemic, reaching 330 per cent of GDP in 2023. While debt has risen across all economies, emerging market and developing economies (EMDEs) face growing vulnerabilities due to slow growth, high interest rates and an increasing reliance on private creditors. These dynamics have eroded fiscal space for Sustainable Development Goal (SDG) investments and exposed gaps in the global debt system.

This paper, part of a series informing the Fourth International Conference on Financing for Development (FfD4), explores recent efforts to reform the sovereign debt architecture. It examines the challenges EMDEs face amid a more complex creditor landscape, where private and non-traditional lenders play a growing role. The paper reviews the G20’s Common Framework, launched to support coordinated debt treatments beyond the Debt Service Suspension Initiative, and analyzes why uptake has been limited and progress slow.

Since 2021, international debate has helped clarify key problems and solutions, while highlighting the link between debt and climate vulnerabilities. Although momentum for reform has waned since the peak of the pandemic, the FfD4 process has renewed calls for comprehensive change. As this paper shows, recent progress, though uneven, suggests that more ambitious reforms remain within reach.

Read the paper here.