Outlet: Arab News

Language: English

Abstract: The Global South faces a growing sovereign debt crisis fueled by high interest rates in wealthier Western economies, as central banks in the US and Europe combat inflation. These policies disproportionately impact poorer nations, driving up the costs of dollar-denominated debt and creating a cycle of rising debt burdens, austerity measures, and socioeconomic instability. This dynamic locks developing countries into financial stagnation, diverting resources from critical sectors like healthcare and education while perpetuating inequality and poverty.

Structural imbalances in the global financial system allow wealthier nations to consolidate their prosperity at the expense of the Global South, which struggles with rising debt servicing costs, currency depreciation, and economic dependency. Current frameworks for debt relief, such as the G20 Common Framework, fall short in addressing these systemic inequities. A comprehensive overhaul of international debt policies, including multilateral sovereign debt restructuring and enhanced support for green growth and climate resilience, is urgently needed.

Without equitable reforms, the Global South remains ensnared in cycles of borrowing and austerity, exacerbating global inequality and threatening economic stability. Addressing this crisis requires innovative, collaborative solutions to foster sustainable development and prevent the deepening divide between the Global North and South.

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