July 1, 2025
Let me begin by thanking President Sánchez and Minister Cuerpo for Spain’s leadership in hosting this important Financing for Development Conference.
I’d like to start by offering a bit of context — a brief overview of the events of the past several years that motivated the creation of the Jubilee Commission and the other two debt commissions represented here. Each commission brings messages that can help shift the global narrative — a narrative that urgently needs to change.
We all know what happened after the 2008 financial crisis. There were massive bailouts of the financial system and a surge in liquidity. Many countries that had never borrowed on international capital markets did so for the first time. Global debt levels increased — but unlike 25 years ago, the creditor landscape had shifted: private creditors and non-Paris Club official creditors now played a much larger role.
Then came COVID-19. Then the war in Ukraine. By the second year of the pandemic, signs of serious debt distress were already widespread. In response, the G20 launched the Common Framework for Debt Treatment — an initiative meant to facilitate better coordination among creditors and support more timely and effective debt restructuring.
But in practice, the Common Framework has largely failed to solve the problem. It did succeed in bringing more actors to the table —and dialogue does matter— but it didn’t change the incentive structure in ways that would lead to the restructurings that were actually needed. Valuable time was lost —or, more bluntly, wasted.
The narrative then shifted. We began to hear that countries facing debt problems were simply experiencing “liquidity challenges.” This framing is not only misleading — it’s dangerous. It reflects the interests of creditors who want to be repaid with money provided by others, especially international financial institutions.
If an institution steps in and says, “We’ll provide financing to address this liquidity problem,” and that money ends up being used to repay private creditors —because money is fungible— then we’re not solving the problem. We’re bailing out distressed debt holders. And in doing so, we delay meaningful solutions and waste resources that could have gone toward development.
Latin America lived through this in the 1980s. That unresolved debt crisis cost us a lost decade of development. At the time, the world lacked a clear narrative about what was really happening — and we risk repeating the same mistake today.
Africa is currently the most affected continent, but countries across Latin America, the Caribbean, and South Asia are also suffering.
So the first step toward a solution is clear: we must change the global narrative. And one of the encouraging developments of this Conference is precisely that — we’re seeing new narratives take shape, thanks in part to the work of the commissions gathered here.
Consider the numbers: in 2022, low- and lower-middle-income countries transferred $50 billion in long-term debt repayments to the private sector. In 2023, the figure was $30 billion. Meanwhile, international financial institutions continue to provide new loans. But if the existing financing mechanisms are being used to bail out private creditors, we’re heading toward a very bad outcome.
We must change course.
Now, to address Mr. Cuerpo’s question: What is realistically achievable? Let me point to two near-term priorities:
First, we must create better incentives — for both creditors and debtors — to engage in meaningful debt operations. Restructurings are essential to restoring or preserving debt sustainability. And that requires a shift in the practices and policies of global financial institutions. They already have the tools — they simply need to use them differently.
Equally important: the IMF and others should not lend to countries in distress if that financing is used to repay distressed debts. This is something that could change immediately — all its needed is political will.
Second, we can and should update the legal frameworks governing sovereign debt. In key jurisdictions such as New York State and England, outdated laws are making restructurings harder and slower.
In New York, for example, current law awards a 9% annual interest rate to holders of debt in arrears before there is a judgment. That provision dates back to 1981 — a time when U.S. inflation was 8.9%. It no longer makes sense. Reform is needed, and it requires support from the New York State Assembly.
Finally, as Trevor Manuel rightly emphasized in his presentation, building domestic capital markets is key. Financing development in local currency is much more sustainable. But this requires a new approach to capital account regulation.
Many of today’s distressed economies integrated into global capital markets without adequate safeguards. The result: destabilizing capital flows that discourage long-term productive investment. A smarter regulatory approach is essential.
To conclude: the commissions represented here — including the Jubilee Commission — were created in response to these realities. They include top experts in the field. Many of them are here with us today.
The reports produced by these commissions lay out a practical path forward. If their proposals are adopted, countries could recover quickly — and lives would be transformed.
Thank you.