A growing chorus of economists, former finance ministers, and policy experts is demanding immediate debt relief for Africa, warning that decades of accumulated external loans are crippling public finances and pushing essential services such as healthcare and education to the brink of collapse.
In an open letter released on Sunday ahead of next month’s World Bank and International Monetary Fund (IMF) annual meetings, the group of more than 30 leading economists argued that developing nations are “defaulting on development” — not because they refuse to meet their debt obligations, but because the burden of repayment leaves them unable to fund their citizens’ most basic needs.
Debt Servicing Outpaces Spending on Health and Education
According to the economists’ analysis, African governments now allocate an average of 17 percent of state revenues to debt servicing. The situation is most dire in low- and middle-income countries where the cost of repaying external loans exceeds the combined budgets for hospitals, schools, and infrastructure.
A shocking 32 African nations now spend more on external debt repayments than on healthcare, while 25 countries spend more on debt than on education. This imbalance, experts say, represents a moral and developmental crisis.
Among the signatories of the letter are Nobel Prize-winning economist Joseph Stiglitz, former Central Bank of Colombia Governor José Antonio Ocampo, and former South African Finance Minister Trevor Manuel — figures who have long advocated for fairer global financial systems and sustainable lending practices.
“Countries around the world are paying exorbitant debt servicing costs instead of paying for schools, hospitals, climate action or other essential services,” the letter stated. “This is not fiscal discipline — it is fiscal suffocation.”
The Human Cost of a Financial Crisis
The impact of this debt squeeze is not abstract. Across much of the African continent, the consequences are playing out in the form of collapsing public services, underpaid workers, and mounting social frustration.
A recent ActionAid report covering six African countries found that 97 percent of health workers said their salaries no longer covered basic living costs. Nearly nine in ten reported shortages of medicine, hospital supplies, or functioning equipment, often forcing doctors to choose which patients receive treatment.
Health systems already strained by the COVID-19 pandemic are now struggling to recover amid tighter budgets, rising inflation, and shrinking international aid. In many countries, rural clinics have closed, vaccination programs have stalled, and staff shortages have reached crisis levels.
The economists’ letter warned that even modest relief could have transformative effects. Capping debt repayments at 10 percent of state revenue, they estimate, could provide clean water to 10 million people in 21 countries and prevent roughly 23,000 child deaths each year — a reminder that fiscal policy can have life-or-death consequences.
Shrinking Aid and a Shifting Global Order
The debt crisis has been compounded by declining development assistance from wealthy nations. The United States, historically the world’s largest foreign aid donor, has cut funding significantly this year as the administration of President Donald Trump redirected resources away from international aid toward domestic and defense priorities.
According to the International Rescue Committee (IRC), 10 of the 13 countries most affected by U.S. aid cuts are in Africa, worsening the strain on public sector budgets that are already under pressure from debt obligations.
At the same time, the global cost-of-living crisis, coupled with the effects of climate change, has made borrowing more expensive and investment less accessible. The World Bank estimates that over half of low-income nations are now in debt distress or at high risk of it — with Africa accounting for the majority of those cases.
Criticism of the G20’s Debt Relief Efforts
The economists were particularly critical of the Group of 20’s (G20) Common Framework for Debt Treatments, which was introduced in 2020 as a way to restructure or reduce the debts of struggling nations. Four years later, however, progress has been sluggish.
The framework has reportedly delivered relief on only 7 percent of the total external debt owed by at-risk countries, a figure experts say falls dramatically short of what is needed to stabilize public finances or promote recovery.
“The G20 framework is not working at the pace or scale required,” the letter argued. “Debt relief must be deeper, faster, and fairer.”
A Call for Structural Reform
In their letter, the economists outlined a three-pronged proposal for reforming how global debt is managed:
- Urgent reduction of debt burdens for low- and middle-income countries through coordinated international action.
- Reforming debt sustainability assessments used by the World Bank and IMF, which often underestimate the social costs of austerity and prioritize creditors over citizens.
- Creating a “Borrowers’ Club” — a coalition of debtor nations that would allow countries to negotiate collectively with lenders and multilateral institutions, strengthening their bargaining position and preventing exploitative lending practices.
Such a coalition, supporters argue, could mirror the Paris Club of creditors, giving developing nations a united front in financial negotiations.
The Broader Implications: Development or Default
The economists’ warning comes at a pivotal moment for Africa. The continent’s population is projected to double by 2050, placing immense pressure on governments to expand public infrastructure, healthcare, and education. Without significant fiscal space, these goals may be unattainable.
Already, the combination of debt repayments and austerity measures has led to public sector wage cuts across much of the continent. In some countries, salaries for civil servants have dropped by as much as 50 percent over the past five years, eroding morale and fueling protests among teachers, nurses, and administrative workers.
“Bold action on debt means more children in classrooms, more nurses in hospitals, and more action on climate change,” the letter concludes. “Failing to act means condemning an entire generation to stagnation.”
Looking Ahead
As finance ministers and policymakers prepare to gather for the World Bank and IMF annual meetings, the call for debt relief is expected to dominate discussions. Observers say the urgency of the situation — coupled with growing discontent among developing nations — may finally force the world’s major creditors to reconsider the balance between repayment and reform.
For now, Africa stands at a crossroads: one path leading toward sustainable recovery and investment in human capital, the other toward deepening austerity and perpetual crisis.
Whether the world listens this time may determine not only Africa’s economic future but the moral credibility of the global financial system itself.
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