UK Seeks Renewed Global Action on Debt Relief for Developing Nations
Britain's Push for Debt Relief and Support for Developing Countries
By David Milliken
BANGKOK, Oct 14 (Reuters) - British Foreign Secretary Ed Miliband said on Wednesday he wanted debt restructuring and other measures to support some of the world's poorest countries to be a key priority when Britain chairs the Group of 20 international forum next year.
Miliband sought to rekindle the ambition that led to a major debt relief plan in 1999 under the then-finance minister Gordon Brown, while acknowledging the budget constraints that have led Britain to sharply scale back its aid spending.
Calls for a New Deal on Debt
"We need a new deal on debt, a deal that supports countries to repay over longer time horizons and, crucially, refinancing with better rates to give developing countries precious fiscal space," he said.
Miliband, who early in his political career was an advisor to Brown, was speaking at an event hosted by the Rockefeller Foundation in Bangkok, where the International Monetary Fund and World Bank are holding their annual meetings.
Surging Borrowing Costs Add to Pressure on Poorest Nations
Economic Challenges and Warnings from the IMF
Earlier on Wednesday, IMF chief Kristalina Georgieva warned that adverse economic developments and the rapid advance of AI threatened to deepen the gulf between advanced and developing economies, especially given steep drops in overseas aid.
A surge in borrowing costs in advanced economies including Britain – where government bond yields hit their highest since 1998 last week – has also pushed up debt servicing costs in developing nations to a 25-year high.
"While many are not defaulting on their payments, they are being forced, if you like, to default on the prospects of future generations," Miliband said.
Potential for Multilateral Development Bank Reforms
Multilateral development banks already had scope to provide greater funding to poor, indebted nations, potentially to the tune of tens of billions of dollars, and further reform could allow hundreds of billions of dollars of refinancing, he added.
Future borrowing terms should also ensure that individual private-sector bondholders could not stall entire restructuring processes to extract bigger repayments, he said.
Reception from the Center for Global Development
The proposals received a cautious welcome from the Center for Global Development, a US NGO.
"There's no doubt an ambitious multilateral response is needed," the Center's Vice President Clemence Landers said.
"But we need to make sure we aren't just using multilateral development bank and IMF finance meant for investment in developing economies to pay back other major creditors, like China and bondholders."
Britain Still on Course to Cut Development Spending
History and Future of UK Aid Spending
The Center for Global Development also called on Britain to reverse planned cuts to aid spending.
Britain became the first country to spend 0.7% of national income on overseas aid in 2013, but in 2021 this was cut to 0.5% and last year then-Prime Minister Keir Starmer said it would be reduced further to 0.3% in 2027 to fund higher defence spending.
Political Response and Fiscal Constraints
Asked about this, Miliband said any change would be up to Britain's new finance minister, John Healey.
"Part of the job of us as politicians is to recognise the world we're in, including fiscal constraints, including the reductions we've seen in aid spending and then think: how do we make a difference, including in our G20 year."
(Reporting by David Milliken; Writing by Mikhail Flores; Editing by Martin Petty and Philippa Fletcher)
