Debt Pressures Continue Unabatted

Published on: 04/07/25

By: Vera Songwe, 

Early and Credible Debt Treatment Pay Higher Dividend

By Vera Songwe

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  • The US economy, once deemed strong, faces significant challenges amid rising global uncertainties and capital flight from emerging markets. While multilateral banks like the IMF and IDA have increased their capital for sustainable growth, emerging economies confront rising debt pressures, market volatility, and a looming risk of default.
  • This year may mark a pivotal moment for low-income countries struggling with debt service sustainability. The international community’s response has been slow, highlighting the need for coordinated, transparent debt resolution strategies that include credible restructuring options.
  • A coordinated global response is essential. Countries must decide whether to honor high debt obligations or confront liquidity issues directly—sometimes, defaulting could restore market access and reduce borrowing costs in the long run.

This note explores four case studies from recent debt crises to illustrate these issues:

  • Barbados

  • Sri Lanka

  • Kenya

  • Côte d'Ivoire

Rohan Reddy via Unsplash
Rohan Reddy via Unsplash

As we move into 2025, understanding these dynamics is vital for policymakers, investors, and development practitioners committed to sustainable growth.