…developing nations pay $500bn more in debt costs than advanced economies- Oyedele
Developing countries pay about $500 billion more in debt costs than they should compared with developed economies, according to estimates cited by Taiwo Oyedele, Nigeria’s finance minister and chair of the Group of 24 (G-24), as the bloc urged the International Monetary Fund (IMF) and World Bank to make financing more affordable for vulnerable nations.
Oyedele said high borrowing costs were constraining developing economies’ ability to invest in growth, create jobs and protect essential public services, calling for cheaper short-term concessional loans and greater mobilisation of private capital over the longer term.
“ Our charge to both the IMF and the World Bank is to find means of making particularly short-term, more affordable concessional borrowing available to particularly the vulnerable countries,” Oyedele told journalists at a G-24 press conference during the IMF and World Bank annual meetings in Bangkok on Tuesday.
He, however, said governments should also identify savings and improve domestic revenue mobilisation, while avoiding tax increases that could deepen hardship for vulnerable households or burden productive sectors.
Borrowing remained necessary to finance development, he said, but governments needed to ensure that debt supported job-rich and inclusive growth rather than leaving countries with rising interest bills and fewer resources for public investment.
Oyedele warned against treating taxation and borrowing as competing choices, arguing that both should be assessed by their effects on people’s welfare. Taxes provide revenue immediately but can reduce households’ ability to afford food, healthcare and education, while debt creates future repayment obligations that ultimately draw on public resources.
He also called for more coordinated sovereign debt treatment, greater transparency and improved credit-rating assessments, alongside reforms to international financial institutions that would give emerging and developing economies a stronger voice in decision-making.
The G-24, a group representing developing countries on international monetary and development finance issues, also urged the IMF to ensure that its lending programmes respond to countries’ economic circumstances. Oyedele said programme design should protect social spending and investment, account for the distributional effects of economic adjustment and avoid measures that could undermine recovery.
He raised concerns about artificial intelligence, warning that developing economies with young populations could experience growth without sufficient employment if governments failed to manage the technology’s adoption and regulation. Economic expansion, he said, must translate into improved living standards rather than higher output accompanied by persistent unemployment.
Climate shocks and the potential impact of El Niño were another concern raised at the briefing, particularly because of their implications for food security and financing needs. Oyedele urged countries to cooperate rather than restrict exports or impose unnecessary tariff and non-tariff barriers when supply pressures emerge.
On climate finance, he called for commitments to be backed by adequate funding, arguing that African countries should not have to increase emissions to achieve economic growth or sacrifice development to protect the environment. The G-24 also called for progress towards mobilising at least $300 billion in private climate finance annually by 2035, in line with the target established at COP29.
Oyedele said international tax cooperation should curb profit shifting, tax avoidance and illicit financial flows, while the global financial system should respect national sovereignty and give developing countries a greater role in shaping economic policy.
Iyabo Masha, director of the G-24 Secretariat, said macroeconomic stability and job creation should be pursued together, rejecting the idea that governments must choose between sound economic management and improving living standards.
“The emphasis on macroeconomic stability by the IMF and indeed by economists all over the world is an important one,” Masha who co-briefed the press said, describing it as the foundation on which countries could build structural reforms, employment policies and infrastructure.
She also said the global sovereign debt architecture had improved since Sri Lanka’s debt crisis, with changes intended to help countries reach restructuring agreements more quickly. The IMF had updated its debt sustainability framework with additional metrics to improve assessments of countries’ capacity to carry debt, while the Global Sovereign Debt Roundtable had revised its restructuring playbook.
Masha cited changes to the Common Framework and progress towards a resolution for Senegal as signs of improvement, but said more work was needed. She urged advanced economies to help address credit-rating practices that can penalise developing countries and called for greater participation by private creditors, particularly in countries with substantial bond debt.
She also highlighted the launch of a borrowers’ platform spearheaded by the United Nations Conference on Trade and Development (UNCTAD), with Pakistan chairing the initiative. The platform is intended to strengthen debtor countries’ collective voice and help them share knowledge about sustainable borrowing.
On IMF governance, Masha said the bloc wanted quota allocations to better reflect current economic realities while protecting the shares of smaller and poorer members. She said the latest completed quota review had not fully resolved the representation gap and that the next review offered an opportunity to address it.
Bernardo Acosta, alternate executive director for Ecuador at the IMF, said countries facing El Niño-related risks had received support through financing mechanisms provided by development institutions, including the World Bank and regional multilateral banks.
Contingent credit facilities had helped improve countries’ preparedness, particularly in Latin America and the Caribbean, although the effects on specific sectors could still be severe, he said.
Acosta added that governments would need to remain alert to the economic consequences and seek additional support where necessary, reinforcing the G-24’s call for international cooperation as developing countries confront climate risks alongside mounting debt and financing pressures.
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