By Rodrigo Campos
April 15 (Reuters) – A group of officials from developing economies launched on Wednesday the Borrowers’ Platform, an effort backed by the United Nations to give debt-hit nations a stronger collective voice in dealings with creditors.
United Nations Secretary-General Antonio Guterres said at the launch event that the platform is essential for power relations to change.
“Today, we launch a breakthrough in global financing, a platform in which borrowing countries sit together, learn from each other and speak with a collective voice,” Guterres said.
He said 3.4 billion people live in countries that spend more on debt service than on health or education.
The initiative is seen partly as a counter for institutions like the Paris Club, where official creditors meet to discuss negotiation strategies when a common debtor encounters problems with repayment.
The Borrowers’ Platform comes amid mounting frustration over the shortcomings of the Common Framework for Debt Restructuring, a Group of 20 major economies’ initiative, which was launched during the COVID-19 pandemic as a sort of expanded Paris Club that included China, the world’s largest official bilateral creditor. That initiative has produced just three full restructuring efforts.
The IMF and World Bank later set up the Global Sovereign Debt Roundtable, which includes some borrower countries and big private sector players, to help streamline and improve the debt restructuring process.
“The Paris Club has got 70 years on the Borrowers’ Club,” said Penelope Hawkins, acting head at the Debt and Development Finance branch at UNCTAD. “This needs to be a permanent structure.”
The Borrowers’ Platform, for which UNCTAD will be the operational backbone, aims also to be an experience repository of sorts, where members share their knowledge and new governments, or new countries, avoid arriving at the table with a lack of preparedness.
“What was once a long-standing aspiration of developing countries has now become a concrete and a collective step forward,” said Ahmed Kouchouk, Egypt’s finance minister. “Today stands as a strong statement of intent that the voice of borrowing nations and countries belongs at the very center of the global financial dialogue.”
The event, presided over by Egypt as chair of the working group, is due to formally open an interim phase for the platform, establish interim leadership and adopt a work program running through October 2026, according to the launch agenda.
The working group that developed the draft modalities was made up of Egypt, Colombia, Honduras, Maldives, Nepal, Pakistan and Zambia. Pakistan served as vice chair.
Under the draft framework, full membership would be voluntary and limited to developing countries that are UN member states, net borrowers and not full members of creditor groupings. The proposed structure includes a Governing Council of finance ministers, central bank governors or equivalent officials, and a Steering Committee of senior technical officials.
“The launch of the Borrowers’ Platform is a major milestone in rebalancing power inequalities in global economic governance,” said Iolanda Fresnillo, policy and advocacy manager at the European Network on Debt and Development (Eurodad), in a statement.
“This long-overdue initiative is a first step towards breaking creditor domination over decision-making on sovereign debt issues.”
(Reporting by Rodrigo Campos in New York, Additional reporting by Libby George and Andrea Shalal in Washington; Editing by Franklin Paul and Andrea Ricci)
