The 2025 Spring Meetings of the World Bank and International Monetary Fund (IMF) have yielded outcomes that offer little hope of addressing the unsustainable debt burden fueling economic crises in low-income countries, says ActionAid.
The time has come for the UN to handle the debt crisis, given that the Global Sovereign Debt Roundtable’s new “restructuring playbook” does not provide any new or structural solutions to the debt crisis.
Roos Saalbrink, the Global Lead on Economic Justice at ActionAid, said: “Sadly, the IMF and World Bank continue to refuse urgent and necessary reforms, instead choosing the failed path of cuts in spending on essential public services such as social safety, healthcare, and education in the nations that can least afford it.”
The grim forecasts presented in the World Economic Outlook and the proposed solution of more fiscal consolidation (more commonly called austerity) without significant solutions for low-income countries raises concerns about more economic hardship for people already living in poverty and debt distress.
“It is heartless to call for more belt-tightening measures from those who do not have any more belt to tighten. Without addressing structural weaknesses, more affordable access to finance or providing significant debt relief, the emphasis on fiscal adjustments is a prescription for increased economic instability and continued suffering in low-income countries.
“This is simply not possible for most low-income countries already spending more on servicing external debt than on healthcare. We see once again that countries in the Global South are at the receiving end of decisions by large economies in the Global North. We see that the global economic governance system does not serve their interests,” added Roos.
The failure of the World Bank and the IMF to address the systemic causes of economic hardship and debt burdens underscores the need for debt resolution to move to the United Nations under a new Framework Convention on Sovereign Debt that will address the debt crises and enable low-income countries to build resilient and inclusive economies.
“We need an economic system that works for people and planet. The IMF and World Bank need to be much more responsive to the realities people face, rather than continuing the status quo. We hope that at the fourth International Conference on Financing for Development, states will agree on the establishment of a new coherent, inclusive and democratic international financial architecture that prioritises human rights,” said Niranjali Amerasinghe, Executive Director of ActionAid USA.
ActionAid is calling for genuine solutions to the debt crisis that will address structural inequalities that limit Global South countries’ access to affordable finance, while illicit financial flows drain their resources.
For low-income countries to build resilient and inclusive economies there is need for urgent collective resolution to the global debt crisis and to demand a new UN Framework Convention on Sovereign Debt to function hand in hand with a UN tax convention.
