There is an urgent case for decisive global debt reform to tackle alarming levels of global debt that threaten the world’s security, Sarah Champion, UK’s MP and Chair of the International Development Committee has stated. She noted that in recent years, sovereign debt burdens in low-income countries have escalated to alarming levels, with the World Bank estimating that external debt of low- and middle-income countries reached a record US$8.8 trillion in 2023. This risks progress towards the Sustainable Development Goals, and if remains unaddressed, threatens not only the world’s poorest nations, but also our collective security, stability, and the effectiveness of our efforts towards overseas development assistance.
Given that 90% of developing countries’ sovereign debt is governed under English Law, the UK is in a unique and powerful position to use its diplomatic leverage to drive systemic change in global finance. She highlighted that one major barrier to true debt reform was the uneven participation of private creditors in relief initiatives, which undermines efforts to reduce debt burdens to sustainable levels. She noted that at present, 28 of the world’s poorest countries are spending more on repaying foreign debt than on healthcare or education.