Yesterday UN Member States reached a Financing for Development agreement. The text, agreed ahead of the UN Financing for Development Conference in Seville from 30 June to 3 July initiates “an intergovernmental process at the United Nations, with a view to make [sic] recommendations for closing gaps in the debt architecture and exploring options to address debt sustainability”.[1]
Because the process just has a view to making recommendations, it is a significant weakening on proposals by African governments for a “strong, far-reaching reform of global debt architecture through the establishment of a UN Framework Convention on Sovereign Debt. This proposed framework should aim to create a more comprehensive, fair, and effective multilateral mechanism for preventing and resolving sovereign debt crises.”[2]
Reacting to the agreement, Heidi Chow, Executive Director at Debt Justice, said:
“The UK and other rich countries should hang their heads in shame for blocking and watering down the demands of lower-income countries for a UN process to cancel debt and prevent debt crises. Going forward, the UK government needs to change its tune, listen to countries at the sharp end of the debt crisis and support major improvements to how international debt is managed.”
In response to the inclusion of text that encourages “jurisdictions to consider passing legislation aimed at limiting holdouts by creditors to facilitate effective debt restructuring” [1] Heidi Chow said:
“The international community has joined African governments in calling for the UK government to pass legislation to ensure private lenders take part in debt relief. Such legal changes are essential so that lower-income countries can spend more on hospitals, schools and climate action.”[3]
The US walked out of the process, and the EU disassociated itself from the paragraph on an intergovernmental debt process.
Iolanda Fresnillo from Eurodad said: “Instead of a commitment to redress the imbalances of a creditor dominated system, the outcome has been limited to a process to ‘make recommendations’. This is a weak mandate at a time when the worst debt crisis the world has ever seen is suffocating public budgets, threatening the entire Sustainable Development Goals agenda and preventing action on the climate crisis.
“The EU consistently watered down the global south proposal for an intergovernmental process to establish a UN convention on sovereign debt, only to end up disassociating themselves from the very weak consensus language they’ve forced through. This is unacceptable.”[4]
Notes
[2] Lome declaration by African Union Heads of State and Finance Ministers, May 2025 https://au.int/sites/default/files/documents/44785-doc-EN_Draft_Zero_Declaration_AU_Conference_on_Debt_Final.pdf
The full text is: “CALL UPON the AU and other pan-African Institutions to advocate for strong, far reaching reform of global debt architecture through the establishment of a UN Framework Convention on Sovereign Debt. This proposed framework should aim to create a more comprehensive, fair, and effective multilateral mechanism for preventing and resolving sovereign debt crises. The Framework Convention on Sovereign Debt should be a legally binding mechanism providing timely and adequate debt relief. It should furthermore be inclusive and transparent, propose development oriented debt sustainability assessments, address illegitimate debt and propose debt crisis prevention mechanisms.”
[3] Of debts owed to private creditors by countries eligible for the G20’s debt relief scheme, 90% are governed by English law. https://debtjustice.org.uk/press-release/g20-debt-suspension-request-90-of-bonds-governed-by-english-law
African Union Heads of State have called for the G20 Framework to be improved through (among other things) “suspending debt servicing for all borrower countries embarking on a debt restructuring” and establishing a “legal mechanism for enforcement purposes, among other proposed reforms.” https://au.int/sites/default/files/documents/44785-doc-EN_Draft_Zero_Declaration_AU_Conference_on_Debt_Final.pdf
Southern Africa High Commissioners and Ambassadors have written to the UK government asking them to introduce debt legislation: https://www.theguardian.com/world/2025/apr/28/african-diplomats-want-british-government-to-back-bill-to-speed-up-debt-restructurings
African Finance Ministers have called for anti-holdout legislation. [UNECA. (2023). Report of the Conference of African Ministers of Finance, Planning and Economic Development on its work during the fifty-fifth session of the Economic Commission for Africa. Page 30. https://bit.ly/40HYE2M]
The World Bank has conducted research into legislative options, which has concluded: “G20 countries could consider enacting legislation to encourage private creditor participation in the Common Framework. This legislation would seek to inhibit preferential recoveries if a creditor chooses not to participate in a CF debt restructuring.” [World Bank Group. (2022). Potential Statutory Options to Encourage Private Sector Creditor Participation in the Common Framework https://bit.ly/40K6IAm]
The IMF recently said of proposed debt legislation in New York, that the bill “could contribute to the ongoing international efforts to support orderly and predictable debt restructuring processes by reducing incentives for disruptive vulture fund litigation, which is a laudable goal,” https://www.bloomberg.com/news/articles/2025-06-13/ny-bill-targeting-em-vulture-funds-faces-imminent-deadline?embedded-checkout=true [4] https://www.eurodad.org/ambitious_un_financing_for_development_outcome_derailed_by_global_north
[4] https://www.eurodad.org/ambitious_un_financing_for_development_outcome_derailed_by_global_north