STATEMENT BY CHAIR OF THE AFRICAN GROUP AT THE 2025 ECOSOC FORUM ON FINANCING: MINISTERIAL FIRESIDE CHAT “LOWERING BORROWING COSTS AND ADVANCING DEVELOPMENT-ORIENTED DEBT SOLUTIONS”

STATEMENT BY H. E. SOPHIE TESFAMARIAM

PERMENANT REPRESENTATIVE OF ERITREA TO THE UN

NEW YORK, 28TH APRIL 2025

H.E. Sophie Tesfamariam at 1st meeting, 2025 ECOSOC Forum on Financing for Development Follow-Up (#FFD4) Watch Here: https://webtv.un.org/en/asset/k12/k1210sy3zu

1. I have the honor to deliver these remarks on behalf of the African Group.

   
   

2. The Group considers that ongoing discussions regarding the current debt crisis and how it can be tackled in the lead up to the 4th International Conference on Financing for Development are critically important.

   
   

3. Africa’s external debt rose from USD 436 billion in 2010 to USD 1,153 billion in 2023. The costs of servicing external debt rose by 412% over this period – almost double the total external debt stock increase.

   
   

4. Of the 38 African countries eligible for the Poverty Reduction and Growth Trust, the proportion with high risk of, or in, debt distress increased from 21% to 58% between 2015 and 2022. For 82% of African countries external debt sustainability deteriorated between 2017 and 2023. In 2023, 90% of African countries were paying more in external debt service costs than the limit contained in the 1953 London Agreement.

   
   

5. It is, therefore, crucial to outline concrete ambitious steps in the FfD4 outcome document to reform the international debt architecture, including the proposals presented by the Group to create a multilateral sovereign debt workout mechanism aligned with sustainable development, and the establishment of a global debt authority.

   
   

6. Other proposals include reforming the G20 Common Framework including by addressing the current imbalance between the costs and benefits of utilizing it. The current costs include credit downgrades, protracted negative economic consequences and loss of access to financial markets. Such reforms could include expanded eligibility, inclusiveness and debt relief mechanisms, in addition to accelerating the process and implementing standstill on debt service costs.

   
   

7. Addressing the role of rating agencies is also crucial including through reducing reliance on their ratings for investment decisions and improving country data and debt management systems and institutional capacity. Technical assistance to also crucial to countries that do not currently have ratings to facilitate access to global financial markets. It is important as well to develop a separate rating process to prevent the ratings impasse from preventing countries from engaging in debt restructuring.

   
   

8. Expanding the use of debt swaps is also effective where appropriate based on each country’s circumstances. This would require transaction costs to be reduced and the development of a pipeline of projects aligned with national development plans.

   
   

   Thank you!