NEW YORK: A group of officials from developing economies have launched the Borrowers’ Platform, an effort backed by the United Nations (UN) to give debt-hit nations a stronger collective voice in dealings with creditors.
UN secretary-general Antonio Guterres said at the launch event that the platform is essential for power relations to change.
“Today, we launch a breakthrough in global financing, a platform in which borrowing countries sit together, learn from each other and speak with a collective voice,” Guterres said.
He said 3.4 billion people live in countries that spend more on debt service than on health or education.
The initiative is seen partly as a counter for institutions like the Paris Club, where official creditors meet to discuss negotiation strategies when a common debtor encounters problems with repayment.
The Borrowers’ Platform comes amid mounting frustration over the shortcomings of the Common Framework for Debt Restructuring, a Group of 20 major economies’ initiative, which was launched during the pandemic as a sort of expanded Paris Club that included China, the world’s largest official bilateral creditor.
That initiative has produced just three full restructuring efforts.
The International Monetary Fund and World Bank later set up the Global Sovereign Debt Roundtable, which includes some borrower countries and big private sector players, to help streamline and improve the debt restructuring process.
“The Paris Club has got 70 years on the Borrowers’ Club,” said Penelope Hawkins, acting head at the Debt and Development Finance branch at the UN Conference on Trade and Development (Unctad). “This needs to be a permanent structure.”
The Borrowers’ Platform, for which Unctad will be the operational backbone, aims also to be an experience repository of sorts, where members share their knowledge and new governments, or new countries, avoid arriving at the table with a lack of preparedness.
“What was once a long-standing aspiration of developing countries has now become a concrete and a collective step forward,” said Ahmed Kouchouk, Egypt’s finance minister.
“Today stands as a strong statement of intent that the voice of borrowing nations and countries belongs at the very centre of the global financial dialogue.”
The event, presided over by Egypt as chair of the working group, is due to formally open an interim phase for the platform, establish interim leadership and adopt a work programme running through October 2026, according to the launch agenda.
Under the draft framework, full membership would be voluntary and limited to developing countries that are UN member states, net borrowers and not full members of creditor groupings.
The proposed structure includes a Governing Council of finance ministers, central bank governors or equivalent officials, and a Steering Committee of senior technical officials.
“The launch of the Borrowers’ Platform is a major milestone in rebalancing power inequalities in global economic governance,” said Iolanda Fresnillo, policy and advocacy manager at the European Network on Debt and Development, in a statement.
“This long-overdue initiative is a first step towards breaking creditor domination over decision-making on sovereign debt issues.” — Reuters
