Navigating Global Debt Challenges Through G20: Brazil’s Role In A Shaping A Just Order With A Rights Based Approach

Despite contemporary global challenges, the G20 remains uniquely positioned to shape solutions for globally important issues including sovereign debt restructuring. Debt issues are complex, stemming from domestic factors such as corruption and capacity deficiencies, and exacerbated by external factors like increasing interest rates, unfavorable terms of trade, and general slowdown in the global economy, etc. As per the International Institute of Finance, global debt has surged to $307 trillion. In the wake of the Pandemic, the G20 had initiated the Debt Service Suspension Initiative (DSSI) in 2020 for temporary relief and followed with the Common Framework for Debt Treatments. The framework intends to bring together large creditors like China and the Paris Club to negotiate plans for debt restructuring. This policy brief seeks to map the constraints faced by indebted nations and delineates a committed and pragmatic pathway to enable Brazil to build global consensus on alleviating debt distress for the world’s poor. The brief proposes strategies to remove systemic constraints that inhibit prompt and efficient debt restructuring. The brief recognizes the crucial role of the IFIs and proposes a balanced model to spare the poor from crushing austerity while enhancing debt servicing capacity of debtor nations. Besides, the policy brief advocates for a ‘rights-based approach’ to frame debt relief beyond pure economics.