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Reuters
17-07-2025
- Business
- Reuters
Issues on the agenda at the G20 finance meeting in South Africa
JOHANNESBURG, July 16 (Reuters) - Group of 20 finance officials meet in South Africa from Thursday amid trade tensions, a global economic slowdown and Washington's threat to withdraw from multilateral organisations. President Cyril Ramaphosa has sought to leverage Africa's first G20 presidency to promote an African agenda, with topics including the high cost of capital and climate change. Here are the key issues to be discussed: Nearly two dozen countries in Africa are already in or at high risk of debt distress, the International Monetary Fund said. Debt-servicing costs crowd out spending on services like infrastructure development, health and education. Launched in late 2020, the G20 Common Framework is a platform aimed at speeding up and simplifying the process of getting overstretched countries back on their feet. But progress has been slow. Making the platform more efficient is one target for South Africa. Ramaphosa launched an Africa Expert Panel in March whose role is to galvanise efforts, chief among them debt relief. Panel chair Trevor Manuel told Reuters it had already begun to make detailed recommendations on improving the framework. "One of the reforms is that the opportunities in the Common Framework should be available to all middle-income countries as well," said Manuel. With aid and development-finance cuts and a pivot by wealthy countries to defence spending, traditional funding sources for developing nations have become scarcer. South Africa is looking to shore up favourable finance for poorer nations. It wants to strengthen and improve the role of multilateral development banks in financing for development. Washington, meanwhile, could potentially withdraw from more global institutions - including these banks. Some analysts believe Washington's withdrawal from multilateralism could leave a space for China to occupy, but it is unclear if Beijing aims to do that. Lending to Africa from China has slowed to a trickle leaving an $80 billion financing gap. Meanwhile, U.S. and European grants - accounting for 25% of the region's external financing - face cuts as Washington suspends foreign aid and European capitals redirect funds toward defence. President Donald Trump's administration has withdrawn from the Just Energy Transition Partnership (JETP) - a key focus for South Africa that is designed to help developing countries transition away from coal to cleaner energy. Launched in 2021, JETPs aim to funnel money from governments, multilateral lenders and the private sector to renewable energy projects in a way that benefits local communities. On Monday, the G20's financial stability watchdog said it had developed a new plan to tackle climate risks but it had paused further policy work in light of the U.S. retreat from climate action. Mobilising funding for climate disasters affecting the Global South was a key agenda item for South Africa's presidency. Trump's tariff threats have disrupted the global economy and the response will dominate the agenda even as U.S. Treasury Secretary Scott Bessent skips the gathering. U.S. plans for tariffs on Canada, Europe and Mexico as well as threats to impose further levies on BRICS member countries including China, India, Russia, Brazil and G20 host South Africa, further heighten tensions between the world's largest economy and other G20 nations. Director General of Treasury Duncan Pieterse said in a statement on Monday that he hoped to issue the first Communique under the South African G20 presidency at the end of the meetings. The G20 was last able to take a mutually agreed stance to issue a Communique in July of 2024.
Eyewitness News
17-07-2025
- Business
- Eyewitness News
Africa Expert Panel chair Manuel says debt crisis in emerging economies cannot be deferred any longer
JOHANNESBURG - Chairperson of the Africa Expert Panel, Trevor Manuel, says the debt crisis in emerging economies cannot be deferred any longer as the G20 finance track meets in KwaZulu-Natal (KZN). High debt servicing costs are crowding out important social spending on health and education, sparking further calls for significant debt relief to unlock the necessary funding to meet some development goals. Manuel is heading the expert panel established earlier this year to address the unprecedented debt crisis affecting many African countries. Manuel joined Finance Minister Enoch Godongwana and Reserve Bank Governor Lesetja Kganyago in Zimbali on Tuesday to discuss policy. This year, African countries will pay close to $89 billion in external debt service alone, with 20 low-income countries at risk of debt distress. External debt has climbed to more than $650 billion, and debt servicing costs reached nearly $90 billion in 2024. The Africa expert panel will add to the G20's policy directives on debt sustainability. Manuel said part of the discussion is the cost of capital. 'When countries borrow and interest rates are very high, and they increase in time, then there's a bigger problem going forward.' He said Africa must better develop domestic capital markets. 'If countries could borrow in their own currencies, then they don't carry the exchange rate burden because when you have a fluctuation, many countries borrow in dollars or euros, and when their own currencies depreciate against those hard currencies, then the interest rate burden becomes unsustainable.' At the start of South Africa's G20 presidency, the country proposed a cost of capital commission to level the playing field.
