Miliband to urge debt relief for developing countries at IMF meetings
Ed Miliband will argue that the global financial system is failing developing countries, and call for a “new deal” to ease their debt burden. Speaking in Bangkok at the IMF and World Bank annual meetings, he is expected to urge multilateral development banks to help countries refinance debt at better rates and repay it over longer periods.
Miliband says high borrowing costs restrict governments’ ability to fund public services and climate action; in sub-Saharan Africa, debt servicing costs more than three times as much as education. The UK also wants faster debt restructuring, changes to prevent private creditors delaying negotiations, and financial support that can be provided within days of a crisis. The proposals come ahead of the UK taking the G20 presidency next year.
- Miliband calls for cheaper, longer-term debt refinancing for developing countries.
- Sub-Saharan Africa spends over three times more on debt servicing than education.
- The UK wants faster debt restructuring and crisis support.
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The International Monetary Fund and World Bank are international institutions that support economic stability and development, including by lending to governments. Developing countries often borrow from these institutions and private lenders, but high interest rates and repayments can leave them with less money for public services and climate projects.
Ed Miliband is the UK energy secretary, and he is due to make the case for changes to how countries’ debts are managed at the meetings in Bangkok. The UK’s proposals include longer repayment periods, lower-cost refinancing and quicker negotiations when a country cannot meet its debts.
Debt relief matters because it can affect how much governments can spend on priorities such as education. The proposals also relate to the UK’s upcoming presidency of the G20, a group of major economies that discusses international economic issues.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Developing countries often face high borrowing costs and debt repayments that crowd out spending on education, health and climate resilience. Better refinancing terms, quicker restructuring and rapid crisis support could ease that pressure and help countries invest in long-term development while reducing the risk of disorderly defaults.
The case against
More generous refinancing and restructuring could shift costs to taxpayers and other borrowers, while encouraging governments or lenders to take on debt on the expectation that it will later be eased. Faster processes that limit private creditors’ ability to delay negotiations may also weaken their protections, potentially making them more cautious about lending and raising borrowing costs for developing countries over time.
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Originally published by The Guardian as “Global financial system is failing developing countries, says Ed Miliband”.