The UK's foreign secretary will argue that the global financial system is failing developing countries burdened by heavy debt, and will call for a 'new deal' to address the crisis. Speaking at the International Monetary Fund and World Bank annual meetings in Bangkok on Wednesday, Ed Miliband will push for multilateral development banks to use their resources to help governments manage borrowing costs more sustainably. He will advocate for refinancing arrangements that extend repayment periods and reduce interest rates, giving countries more room in their budgets for other priorities.
Miliband will demand several reforms, including changes to the 'common framework' for restructuring debts of countries unable to pay, which he says is too slow and cumbersome. He will also call for faster crisis financing, arguing that governments should receive support within days rather than months. Additionally, he will seek to prevent private creditors from blocking debt negotiations, as has occurred in cases like Ethiopia's.
The foreign secretary will highlight that in sub-Saharan Africa, debt servicing costs exceed spending on education by more than three times. He will argue that improving the financial system for emerging economies could also attract more private investment. Miliband's focus reflects the UK's upcoming presidency of the G20 group next year, a key forum for discussing global financial issues including sovereign debt.
The chancellor, John Healey, will outline his own G20 priorities in Bangkok this week, including mobilising more resources from the IMF and World Bank balance sheets. This push echoes the UK's 2005 Gleneagles summit, which resulted in debt write-downs for more than 30 countries.