The UK government has established a coalition aimed at addressing sovereign debt sustainability in developing economies. This initiative seeks to unite private sector players and government entities to ensure that these nations can manage their debt obligations while continuing to attract private investments. Following the Covid-19 pandemic, many countries faced a wave of sovereign debt defaults, and although the peak of this crisis has passed, numerous nations are still struggling with high debt repayment costs. London and New York serve as the legal hubs for most sovereign bond lending globally, with a significant portion of African government bonds being domiciled in London. The newly formed London Coalition on Sustainable Sovereign Debt will focus on enhancing transparency in debt contracts, improving loan terms to address natural disasters, and resolving issues related to group lending practices. The UK Treasury emphasized that promoting equitable and transparent debt restructuring, along with fostering resilient borrowing practices, could expand potential markets for the UK and enhance global security. This initiative was launched ahead of the UN Financing for Development conference, a major event occurring once every decade, set to begin in Seville, Spain, on June 30. The launch comes amid significant reductions in aid and concessional finance from wealthy nations, including the UK and the US. A Vatican-backed report on financial reform recently suggested legal changes in London and New York to prevent lenders from impeding debt restructuring negotiations during defaults, though neither jurisdiction has adopted such measures yet.
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UK government launches group to tackle sovereign debt in developing economies
LONDON, June 24 (Reuters) – The British government has created a coalition to bring together the private sector and government to help developing countries make their sovereign debt more sustainable and continue to access private investment. n nA wave of sovereign debt defaults following the Covid-19 pandemic, and a global interest rate hiking cycle, have largely crested, but dozens of countries are still grappling with precarious debt repayment costs. n nSign up here. n nLondon and New York are the legal location for the bulk of the world ‘s bond lending to sovereign states, and most bonds to African governments are domiciled in London. n nKey priorities of the London Coalition on Sustainable Sovereign Debt will include making debt contracts clearer and more transparent, improving the way loan terms address natural disasters, and addressing problems with group lending practices, the UK Treasury said in a statement on Monday. n nIt also said that encouraging fair and open debt restructuring, and “more resilient borrowing practices”, would help expand potential markets for the UK and improve security. n nThe grouping was launched just a week before the United Nations Financing for Development conference, a once-in-a-decade event which kicks off in the Spanish city of Seville on June 30. The launch also comes amid historic cuts to aid and concessional finance from wealthy nations, including the UK and the United States. n nAmong measures suggested in a recent Vatican-backed report on financial reform were legal changes in London and New York that would prevent lenders from slowing down debt restructuring negotiations when countries default. Neither jurisdiction has so far adopted the measure. n nReporting by Libby George; Editing by Rachna Uppal n nOur Standards: The Thomson Reuters Trust Principles., opens new tab n nLibby George is a London-based journalist on the Reuters emerging markets team. She was part of a team named as Pulitzer finalists in 2023, and who won the Selden Ring Award for International Investigative Reporting, for a series of stories revealing abuses by Nigeria’s military. After launching her career as a political journalist in Washington, D.C., she joined Reuters in 2015 covering oil, and from 2019-2023, she was senior correspondent and acting bureau chief based in Lagos, Nigeria.
— news from Reuters
