{"id":57454,"date":"2025-10-24T18:48:50","date_gmt":"2025-10-24T13:18:50","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=57454"},"modified":"2025-10-25T16:32:22","modified_gmt":"2025-10-25T11:02:22","slug":"sevilla-forum-global-debt-crisis","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/24-10-2025\/sevilla-forum-global-debt-crisis","title":{"rendered":"The Sevilla Forum Launched to Tackle Global Debt Crisis"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>At the 16th United Nations Conference on Trade and Development (UNCTAD16) held in Geneva, a new global initiative, the <strong>Sevilla Forum on Debt<\/strong>, was launched.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About the Sevilla Forum<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Forum, <strong>led by Spain<\/strong> and supported by <strong>UNCTAD<\/strong> and the <strong>United Nations Department of Economic and Social Affairs (UN DESA),<\/strong> aims to create a permanent, inclusive platform for dialogue and coordinated action on sovereign debt challenges.<\/li>\n\n\n\n<li>It marks one of the first tangible outcomes of the <strong>Fourth International Conference on Financing for Development (FfD4)<\/strong> and is part of the broader <strong>Sevilla Platform for Action<\/strong>, which operationalizes the Sevilla Commitment.\n<ul class=\"wp-block-list\">\n<li><strong>The Sevilla Commitment<\/strong> lays down a roadmap for strengthening development financing and ensuring debt sustainability in developing economies.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Rising Global Debt Levels<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>According to UNCTAD, <strong>global public debt<\/strong> reached a record<strong> $102 trillion in 2024.<\/strong>\n<ul class=\"wp-block-list\">\n<li>Developing countries accounted for <strong>$31 trillion<\/strong> of this debt.<\/li>\n\n\n\n<li>These countries collectively paid <strong>$921 billion in interest payments<\/strong>, a burden exceeding spending on health and education in many cases.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>As per the <strong>World Bank 2024 Report<\/strong>, Developing countries spent a record <strong>$1.4 trillion<\/strong> to service their foreign debt as their interest costs climbed to a 20-year high in <strong>2023.<\/strong>\n<ul class=\"wp-block-list\">\n<li>Currently, more than half of developing countries allocate at least <strong>8%<\/strong> of government revenues to interest payments, a figure that has doubled over the past decade.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>This unsustainable debt trajectory threatens progress toward the <strong><a href=\"https:\/\/www.nextias.com\/ca\/editorial-analysis\/19-06-2024\/world-lagging-on-sustainable-development-goals\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/editorial-analysis\/19-06-2024\/world-lagging-on-sustainable-development-goals\">Sustainable Development Goals (SDGs)<\/a> <\/strong>and has amplified calls for comprehensive sovereign debt reform.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"dae5ea\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"649\" height=\"488\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/The-Sevilla-Forum-Launched-to-Tackle-Global-Debt-Crisis.png\" alt=\"The Sevilla Forum Launched to Tackle Global Debt Crisis\" class=\"not-transparent wp-image-57485\" style=\"--dominant-color: #dae5ea; width:551px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/The-Sevilla-Forum-Launched-to-Tackle-Global-Debt-Crisis.png 649w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/The-Sevilla-Forum-Launched-to-Tackle-Global-Debt-Crisis-300x226.png 300w\" sizes=\"auto, (max-width: 649px) 100vw, 649px\" \/><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><strong>Public debt of India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s public debt-to-GDP ratio has barely increased from 81% in 2005-06 to <strong>84% in 2021-22<\/strong>, and is back to <strong>81% in 2022-23.<\/strong><\/li>\n\n\n\n<li>As per the <strong>Fiscal Responsibility and Budget Management (FRBM) Act 2003<\/strong>, the general government debt was supposed to be brought down to <strong>60% of GDP<\/strong> by <strong>2024-25.<\/strong><\/li>\n\n\n\n<li>The IMF states that India\u2019s general government debt, including the Centre and States, could be <strong>100% of GDP<\/strong> under adverse circumstances by fiscal 2028.<\/li>\n\n\n\n<li>It has projected the ratio at <strong>82.4% for 2024-25.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Factors Contributing to Debt Burden<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Oil Price Shock (1970s): <\/strong>The 1970s saw a sharp rise in oil prices due to geopolitical tensions, including the <strong>1973 Arab Oil Embargo.<\/strong>\n<ul class=\"wp-block-list\">\n<li>Oil-importing developing countries faced a financial squeeze due to rising import bills.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Petrodollar Recycling: <\/strong>Oil-exporting Arab nations deposited their surplus \u201cpetrodollars\u201d in Western banks.\n<ul class=\"wp-block-list\">\n<li>These funds were loaned to developing countries, enabling them to afford higher oil prices and continue purchasing Western exports.<\/li>\n\n\n\n<li>This system supported Western economies by keeping factories open and avoiding recession.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Rise of Private Lending:<\/strong> Private Western banks began overtaking official sources (like governments or IMF) in lending.\n<ul class=\"wp-block-list\">\n<li>By 1982, banks lent $63 billion annually\u2014nearly double the official lending.<\/li>\n\n\n\n<li>Many developing countries experienced rapid economic growth in the 1970s as a result.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>The Debt Crisis (1980s):<\/strong> A global recession and high interest rates hit in the 1980s.\n<ul class=\"wp-block-list\">\n<li>Developing countries struggled to repay their debts and began borrowing more just to pay interest, a classic debt trap.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>High Interest: <\/strong>The UNCTAD report showed that developing regions borrow at rates that are <strong>2-4 times higher<\/strong> than those of the US and <strong>6-12 times higher<\/strong> than those of <strong>Germany.<\/strong>\n<ul class=\"wp-block-list\">\n<li>This is largely because developing countries are perceived to have a more <strong>\u201chigh-risk environment\u201d<\/strong>, and thereby face higher cost of borrowing.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Concerns of rising debt<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Impact on climate action:<\/strong> Developing countries need to increase climate investments from their current level of <strong>2.1% of GDP to 6.9% by 2030 <\/strong>to meet the <strong>Paris Agreement targets<\/strong>. However, they are currently spending more on interest payments than on climate investments.<\/li>\n\n\n\n<li><strong>&nbsp;Increase the cost of resolving debt crises: <\/strong>The increasing complexity of the creditor base makes debt restructuring more difficult as it requires negotiating with a <strong>broader range of creditors <\/strong>with diverging interests and legal frameworks.<\/li>\n\n\n\n<li><strong>Inequalities in the international financial architecture: <\/strong>Borrowing from private sources on commercial terms is more expensive than concessional financing from multilateral and bilateral sources.<\/li>\n\n\n\n<li>Countries with high debt <strong>reduce expenditure in public services<\/strong> such as healthcare, education, and social welfare. This can exacerbate poverty and inequality.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Promote Responsible Borrowing and Lending:<\/strong> Encourage countries to follow fiscal prudence and avoid excessive reliance on high-cost commercial loans.<\/li>\n\n\n\n<li><strong>Enhance Coordination Among Stakeholders: <\/strong>Foster collaboration between multilateral institutions, bilateral creditors, private banks, and borrower nations.<\/li>\n\n\n\n<li><strong>Link Debt Relief to Development Goals: <\/strong>&nbsp;Tie debt swaps and relief measures to investments in health, education, climate action, and sustainable infrastructure.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.downtoearth.org.in\/climate-change\/new-sevilla-forum-on-debt-launched-to-tackle-global-debt-crisis\" target=\"_blank\" rel=\"noopener\"><strong>DTE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context<\/strong><\/p>\n<li class=\"ms-5\">At the 16th United Nations Conference on Trade and Development (UNCTAD16) held in Geneva, a new global initiative, the Sevilla Forum on Debt, was launched.<\/li>\n<p><\/p>\n<p><strong>About the Sevilla Forum<\/strong><\/p>\n<li class=\"ms-5\">The Forum, led by Spain and supported by UNCTAD and the United Nations Department of Economic and Social Affairs (UN DESA), aims to create a permanent, inclusive platform for dialogue and coordinated action on sovereign debt challenges.<\/li>\n<li class=\"ms-5\">The Sevilla Commitment lays down a roadmap for strengthening development financing and ensuring debt sustainability in developing economies.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/24-10-2025\/sevilla-forum-global-debt-crisis\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-57454","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/57454","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=57454"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/57454\/revisions"}],"predecessor-version":[{"id":57533,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/57454\/revisions\/57533"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=57454"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=57454"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=57454"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}