The Italian government leads the G7 Summit in a central year to renew global development policies and strengthen collaboration between advanced economies and more fragile countries. The new approach that Italy has chosen to undertake with the Mattei Plan fits fully into the framework of these renewed policies for a change of direction, also methodological, in cooperation with African countries and beyond. A direction that recognizes “economic development” as the fulcrum of an action aimed at creating employment, innovation and prosperity and, consequently, guaranteeing peace. In this context, however, we risk overlooking an element that undermines global well-being: the worrying growth of debt in the South of the world. International agencies point out that around 20 developing countries pay more in debt interest than they invest in education. And 45 spend more on debt interest than on healthcare. The Covid-19 pandemic has had uneven economic impacts, disproportionately affecting the developing world. In fact, today, one in three countries in the Global South is poorer than in the pre-pandemic era.
More recently, wars in Ukraine and the Middle East have led to a rise in global inflation, causing a tightening of financial conditions around the world. Today, refinancing debts has become more expensive and, in some cases, simply impossible. The International Monetary Fund estimates that out of 29 low-income countries, 9 are in a serious debt crisis and 51 are at high or moderate risk of crisis.
Pope Francis had already warned in 2021 that “alleviating the burden of debt that today affects a large number of countries and communities is a profoundly human gesture that can help people develop and have access to vaccines, health, education and work”. With these words, he underlined that debt is not only a political and economic issue, but also a profoundly moral issue.
How we address this growing debt in developing countries will have significant effects on the lives and well-being of millions of people. As the next Jubilee year approaches, in 2025, it will be important to place emphasis on transformation processes aimed at reducing inequalities.
Renewed international development requires new approaches, offering greater flexibility to international cooperation programs, to adapt them to ongoing changes, starting from the involvement of local civil society. A need expressed in numerous summits and meetings between emerging countries and more advanced countries. In this sense, the African countries gathered in Nairobi in April launched a strong appeal for an ambitious refinancing of the World Bank’s International Development Agency (IDA21), the most important global source of financing for development, thanks to loan conditions to the benefit of the 75 poorest countries in the world, mostly African.
The pandemic and rising interest rates have also put a strain on IDA resources. Last month at the G7 Finance meeting in Stresa, support was expressed for an IDA21 refinancing through “a package of policies and financing that guarantees ambitious results”, but there was no concrete signal on exceeding the critical threshold of 100 billion dollars , as requested by the World Bank, and the 120 billion dollars expected by African leaders.
The Italian government has the opportunity to announce, at the G7 Summit in Puglia, its intention to increase the contribution to IDA21, also inviting the other G7 countries to join in this effort to strengthen African and global development. This would help create a domino effect and give strong impetus and credibility not only to Italy’s multilateral projection, but also to its bilateral one through the Mattei Plan.
A great result of this G7 Presidency, which could be achieved by allocating part of the financial availability for the multilateral funds of the Ministry of Finance already foreseen in the Budget Plan for 2024. Addressing the unsustainable burdens of sovereign debt is a necessary condition for re-establishing only growth, but also global peace. As Pope Francis underlined in the encyclical on fraternity and social friendship, “real and lasting peace is only possible starting from a global ethic of solidarity and cooperation at the service of a future shaped by the interdependence and co-responsibility of the whole family Human”.
