Since the COVID-19 pandemic, emerging market economies, and especially low-income countries (LICs), have been facing a potential debt crisis. While a catastrophic wave of defaults and a systemic crisis have been avoided, strong challenges persist and new shocks loom on the trade and aid front.

High rollover needs combined with high US interest rates strain national budgets and create a complex environment of debt distress and liquidity impasses.

Building upon our previous recommendations to the T20 Brazil 2024, we propose the following enhancements to the Common Framework (CF) and the Global Sovereign Debt Roundtable (GSDR) as the pillars of a Global Debt Governance system:

1.        Development of a Universal Code of Conduct under the guidance of the G20 Financial Stability Board (FSB), establishing common broad principles throughout the whole debt engagement process. The FSB should develop the code of conduct into a proper regulatory standard with workable supervision, considering lessons learned from the CF and GSDR.

2.         Establishment of a dedicated Secretariat to Oversee Debt Treatments to manage and coordinate the CF process, constituted from the institutions that currently support the GSDR and the CF process. It would be crucial in ensuring the smooth implementation of debt treatments, facilitating communication among all parties, and providing technical support.

These enhancements should be supplemented by further development of the proposals for a Liquidity Facility as part of the CF and use of guarantees from MDBs.