On July 16, finance ministers and central bank governors from G20 member states met in Cape Town, South Africa, for a session focused on global debt restructuring, climate finance, and trade. As host nation, South Africa steered conversations toward issues pressing for the Global South, including sovereign debt burdens, sustainable development, and the future of multilateral funding.
Debt restructuring was a central topic of the discussions. According to the World Bank, 60% of low income countries are at high risk of or already experiencing debt distress. African countries such as Zambia, Ghana, and Ethiopia have struggled to restructure debt through the G20’s Common Framework. Despite some progress in Zambia’s case, delays and coordination issues, particularly between Western lenders and China, have limited the framework’s effectiveness. African finance officials raised concerns that existing debt relief mechanisms are too slow and lack transparency. They also pointed to the imbalance of power in global financial institutions, where creditor nations dominate decision-making.
The International Monetary Fund (IMF) and World Bank have urged G20 members to enhance the predictability of the Common Framework by creating a debt resolution mechanism with clear procedural timelines, mandatory inclusion of private creditors, and improved debt data transparency. However, no formal reforms were adopted during the meeting, although a technical working group was established to present recommendations ahead of the IMF-World Bank Annual Meetings in Marrakech in October.
Climate financing was another key issue, particularly in light of the United States scaling back its international climate commitments. The retreat has cast uncertainty over programs like the Just Energy Transition Partnerships (JETPs), which aim to support developing countries in shifting away from fossil fuels. The first JETP, involving South Africa, was launched at COP26 in 2021, with a pledge of $8.5 billion from the US, UK, Germany, France, and the EU. However, implementation has been slow, and less than 5% of the committed funds have been disbursed to date.
The session also reignited debate around Special Drawing Rights (SDRs). South Africa and Brazil reiterated their proposal for the reallocation of $100 billion in unused SDRs from wealthy countries to vulnerable economies. Although the IMF’s 2021 general allocation of SDRs was historically large, totalling $650 billion, out of which Africa received just over 5% of the total share. The G20 has not reached consensus on rechannelling these reserves through multilateral development banks, although France and Germany expressed conditional support for limited reallocation with governance safeguards.
India and Brazil called for reforming the Bretton Woods institutions. India’s Finance Minister Nirmala Sitharaman stated that voting rights and board representation at the IMF and World Bank must better reflect the current global economic order, noting that emerging economies now account for over 45% of global GDP but hold disproportionately low decision-making power. Proposals included changes to quota allocations and the establishment of a new liquidity facility tailored for climate-vulnerable countries.
Despite the differences, the G20 reaffirmed its support for multilateralism and agreed to establish three technical working groups on debt transparency, climate finance mobilisation, and reform of global financial governance. These groups are expected to report ahead of the G20 Leaders’ Summit in Rio de Janeiro later this year.
Another important topic of discussion in side meetings was growing trade friction related to Russia’s war in Ukraine. Just days before the G20 gathering, NATO Secretary-General Mark Rutte suggested that countries continuing to trade with Russia could face 100% secondary tariffs. Although not an official G20 agenda item, this remark sparked serious concern among BRICS members, particularly India, China, and Brazil, who maintain energy and commodity trade links with Moscow.
The Cape Town meeting exposed fundamental limitations in the current multilateral financial order. With climate vulnerability rising, debt distress deepening, and trust in international commitments faltering, developing economies are increasingly calling for structural reforms that go beyond incremental technical changes.
Dhanishtha De is a trainee journalist at Cult Current. The views expressed in the article are
her ownand do not necessarily reflect the official stance of Cult Current.