Last weekend, the Group of 20 (G20) held its summit in Riyadh, Saudi Arabia. Leaders from the world’s largest economies met virtually to discuss the global response to the Covid-19 pandemic, which has triggered the worst recession since the Second World War. The meeting followed the G20’s announcement of limp new proposals to address the looming debt crisis.
The economic fallout from the pandemic has pushed many countries with already unsustainable debt levels to the edge of debt default – where governments are unable to pay creditors back. Sovereign debt burdens have skyrocketed in recent years, reaching unprecedented levels prior to the pandemic.
For wealthier countries like the United Kingdom, current levels of borrowing and debt are not a problem – much of the UK’s debt is owed to itself or institutions within the UK and it can borrow at low interest rates. But countries in the Global South, where most debt is owed to foreign creditors, including multilateral institutions, private banks, investment funds and wealthy countries, are at much higher risk of default.
