Developing nations face significant risk from growing debt burden, G24 chair says

Oyedele, who also serves as Nigeria's minister of finance and coordinating minister of the economy, highlighted that these high debt costs strain emerging markets and developing economies' progress towards achieving inclusive and job-rich economic transformation. Factors contributing to this pressure include supply shocks from the war in the Middle East, rising food prices due to a "super El Niño," and surging borrowing costs.

Members of the G24, a bloc of emerging and developing market nations, called on the IMF and World Bank to provide more accessible and affordable concessional financing to vulnerable countries. Iyabo Masha, director of the G24 secretariat, noted that while debt restrains growth by diverting resources from financing further expansion, recent improvements to the sovereign debt architecture should expedite debt crisis resolutions.

Masha cited Senegal as an example, stating the country is close to a final resolution with its creditors. Reuters reported last week that Senegal aims for an agreement in principle with its official lenders and bondholders by December, two years after misreported debt emerged, estimated at $13 billion.

Beyond debt challenges, developing economies also face the risk of being left behind in the rapid adoption of artificial intelligence. The IMF has trimmed growth forecasts for Latin America and the Caribbean, noting that the region is not significantly benefiting from the AI boom. Masha expressed concern that AI could widen the digital divide, particularly for countries that have not yet reached certain development levels and lack adequate infrastructure like electricity access, which would hinder their ability to invest in data centers and benefit from AI.