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The UK Government is one of the biggest obstacles to the world’s poorest countries securing debt relief, according to a coalition of aid organisations ahead of a crucial international development conference.
Christian Aid, the non-profit coalition Bond, and other campaign groups have accused the UK of blocking proposals that would help developing nations tackle their crippling debt burdens, despite promises to reset relationships with the global south.
The criticism comes as world leaders prepare for the United Nations’ Fourth International Conference on Financing for Development (FfD4) in Seville (Spain) from 30 June. The week is set to see the most politically significant development negotiations of the decade.
On Tuesday (18th June), world leaders in in New York agreed a draft agreement ahead of the conference. But it has received heavy criticism from aid groups. “It falls far short of the ambition needed to address the worsening debt and climate crises, poverty and inequalities in the global south,” according to the European Network on Debt and Development (Eurodad).
Negotiations for it began with “ambitious language on sovereign debt architecture reform, international tax cooperation and international development cooperation, and development finance more broadly” – but it has been “significantly weakened during negotiations, with many meaningful action-oriented commitments diluted due to the policy priorities of Global North governments,” a Eurodad spokesperson said.
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Jean Saldanha, Director of the European Network on Debt and Development (Eurodad) hit out at the “lowest common denominator” agreement seemingly being pushed through.
“What began as a critical opportunity to advance essential reforms that would give Global South countries a seat at the decision-making table was ultimately derailed by sustained pressure from Global North countries, including the EU and UK, to pursue their policy agenda,” she said.
The draft plan, if approved in Seville later this month, would make debt restructuring processes faster, more predictable, and development-oriented while providing developing countries with better tools and support to manage their debt burdens sustainably. Developing nations facing natural disasters would be able to pause debt repayments.
But Saldanha added: “While there is some positive language in the document, at a time when global south countries have been calling for the transformation of the international financial architecture, rich countries have once again shown their reluctance to give up their grip on the global economic system.”
Crippling Debt Crisis
The forthcoming UN conference takes place against a backdrop of what campaigners call the “worst debt crisis in history” – beyond that faced at the peak of campaigning at the turn of the millennium.
According to UN data, 48 developing countries now spend more on interest payments than on education or health, a problem affecting approximately 3.3 billion people.
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Jennifer Larbie, Head of Campaigns and UK Advocacy at Christian Aid told a press conference on Tuesday: “It cannot be overstated how much the debt crisis is systematically locking low income countries in perpetual poverty….
“African countries are spending 50 times more on external debt payments than they receive in UK aid. This is shocking. This isn’t sustainable…Urgency is needed.”
And she hit out at the UK Government’s “Jekyll and Hyde approach” to the global south.
“On the one hand, they say that they want to rebuild relationships with the Global South. They say that that’s a priority. They stated that in their manifesto, they also said that tackling the debt crisis was a priority.
“Yet, on the other hand, as we’ve heard, they are actively blocking proposals that will deliver solutions on the debt crisis right up until the final hours of the negotiations.”
African countries face particularly punitive borrowing costs, paying rates that are 2-4 times higher than the United States and 6-12 times higher than Germany when seeking international loans.
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British Blockers
Aid coalition Bond says the UK, along with the EU, is blocking language in the FfD4 outcome document that would give Global South countries equal representation in debt negotiations.
The UK is also reportedly opposing proposals to overhaul International Monetary Fund and World Bank governance structures. The current global debt system is dominated by rich countries through institutions like the OECD, which helps set international tax policy, as well as the IMF, and World Bank.
Western private lenders hold the largest share of developing country debt – even more than Chinese lenders. UK financial institutions and investors are major players given the size of the lending capital, the City of London.
Decision-making boards of international financial institutions are also dominated by representatives from the US, UK, and EU.
Debt-reform organisations and aid groups want the UK to force private creditors to participate in debt relief initiatives to ease the burden of eye-watering interest payments on developing countries.
One proposal is for the United Nations to lead efforts and force creditors to the negotiating table. But the EU has reportedly made opposition to a UN-led debt reform process a “red line”, and the UK appears to be following suit. The UN is the only forum where all countries have equal representation.
The primary reason for blocking reforms is to protect British private creditors from financial losses, according to Christian Aid.
‘Spooking the Markets’
Responding to a question from Byline Times, Jennifer Larbie, Head of Campaigns and UK Advocacy at the global charity, said: “We engage with the Government around debt legislation. What we hear back is that there is a fear that, somehow, debt legislation would spook the markets, and upset the financial City of London.
“Our response, based on experience, is that we’ve had legislation in the past. It was the Labour Government in 2010 that introduced legislation to tackle the debt crisis.
“Reviews under the Conservative Party considered whether that legislation had an adverse impact on the city of London and private lenders, and that review told us that there was no impact…
“I think it’s particularly clear that [private lenders] have an outsized voice and outsized influence in the UK Government. But I think the British public are on our side when it comes to debt and the impact and the need to tackle the debt crisis.”
She added: “The British public are clear that something must be done on this, and we will continue to show the UK Government there are options that they have at their disposal.”
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Western Front
The aid groups are calling for the creation of a UN-led debt restructuring mechanism that would give developing countries a fairer voice in negotiations with creditors.
UK positions that have drawn criticism include resisting proposals to reform IMF and World Bank governance structures, and blocking measures that would compel private creditors to participate in debt relief – in other words, to take a haircut on their potential financial returns.
“Against the backdrop of slashing its own aid budget and putting its contribution to climate finance in jeopardy, it is also blocking global south Governments’ specific proposals on tackling debt that would come at no cost to UK taxpayers,” the groups said in a briefing.
The UK’s position is particularly significant in talks because the majority of debts that African and other low-income countries owe to private creditors are governed under English law, giving Britain potential leverage to enforce fairer terms.
A key battleground involves the role of private lenders, who now receive 39% of lower-income countries’ debt repayments. More than 43% of African external debt is owed to Western private creditors.
These private creditors have repeatedly delayed debt relief negotiations, aid groups argue. In a joint briefing, Bond, Christian Aid and the Centre for Economic & Social Rights argue that in Chad, commodity traders have in recent years held up talks, while Zambia and Ghana have agreed limited deals with bondholders but are still waiting for agreements with other Western private creditors. In Ethiopia, bondholders have rejected debt restructuring proposals and reserved rights to sue in English courts, according to the briefing.
“Just the world’s 10 richest individuals hold more than $1 trillion in combined wealth,” a briefing from the aid group notes, while countries lose $492 billion annually due to tax evasion and avoidance by multinational corporations.
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Climate Cash
Many Global South countries now are spending five times more on debt repayments than on climate action, while climate-related disasters have increased dramatically in the past two decades.
Argentina provides a stark example, where aid groups say a $64 billion debt to the IMF is driving fossil fuel expansion as the country ramps up fracked gas exports to generate foreign currency for repayments.
“This debt-driven model is worsening Argentina’s climate vulnerability, diverting resources away from sustainable development and toward methane-intensive extraction,” according to the campaign groups’ analysis.
The United States has now pulled out of the FfD4 conference under Donald Trump America. He had already denounced the UN’s 2030 Sustainable Development Goals and withdrawn from UN tax cooperation negotiations.
Only 17% of the UN’s Sustainable Development Goals are currently on track, with just five years remaining until the 2030 deadline.
Twenty-five years ago, the UK helped lead global debt relief initiatives during the Jubilee 2000 campaign.
“In this Jubilee year, 25 years since the UK helped lead global debt relief efforts, it’s time for the UK to once again be on the right side of history,” the aid groups argue.
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‘Empty Handed’
In response to the Fourth Financing for Development Conference (FFD4) Outcome Document being approved to move to Seville on Tuesday night, Emma Burgisser, Christian Aid’s Economic Justice Lead said: “The UK not only turned up to FFD4 empty-handed; it helped block the changes needed to deliver economic justice. It has managed to reset relations backwards and disrespectfully ride roughshod over the reasonable demands of global South governments.
“Nowhere is this failure clearer than in the handling of debt reform.”
The original draft called for a “meaningful” intergovernmental process at the UN to build a fair, transparent, and effective debt workout mechanism—something the Global South has long demanded.
However, Christian Aid says the final version “weakens this mandate” to a process that merely makes recommendations.
Other critical areas saw similar “backsliding.” Support for a UN Tax Convention was watered down to offering “constructive engagement”.
Agreed language on climate change was also reportedly removed from the final text—including a reaffirmation of countries’ climate finance obligations under the Paris Agreement on climate action.
And the paragraph on phasing out fossil fuel subsidies was deleted entirely, “just as fossil finance soars and climate impacts deepen debt vulnerabilities,” Christian Aid said in a statement.
The final outcome of the negotiations could determine whether the international community can build a more equitable global financial system – or whether existing debt burdens will be tightened for another generation. At present, it seems to be set up to fail.
You can read the draft agreement docs here.
The Foreign Office did not respond in time to a request for comment.
19 June update: An earlier version of this piece misattributed some quotes to Bond, when they were from Christian Aid. Our apologies. This has been amended.
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