According to the latest International Monetary Fund (IMF) G20 assessment, global activity remains subdued as many countries grapple with the lasting effects of the pandemic, persistent inflation and tightening financial conditions.
While inflation has eased from recent peaks, it is still above target in several major economies, leaving central banks cautious about loosening monetary policy too quickly. This has pushed up financing costs worldwide, worsening the pressure on developing countries with high debt-service burdens.
The G20’s São Paulo Call to Action underscores the scale of the problem: total indebtedness has climbed sharply, with the heaviest strain on low-income and emerging economies, where widening fiscal deficits and higher borrowing costs have limited space for investment in social protection, education and climate adaptation. African countries are among those most exposed to these risks.
The report warns that the financing gap for achieving sustainable development and climate goals is widening, driven by underinvestment in green infrastructure, slow progress in digital transformation and growing vulnerabilities to extreme weather. Many developing nations face the double challenge of climate shocks and restricted fiscal capacity, leaving them less able to respond to crises or support vulnerable households.
On inclusive growth, the G20 highlights stalled productivity, deepening digital divides and labour-market gaps that disproportionately affect women, youth and informal workers, groups that make up a large share of Africa’s workforce. Strengthening social protection systems, modernising labour regulations and expanding digital access are identified as essential to tackling inequality and strengthening resilience.
The G20 urges international financial institutions and creditors to accelerate debt restructuring, expand concessional financing and support domestic reforms that boost productivity and investment. For Africa, where climate vulnerability, debt pressures and demographic growth converge, the stakes could not be higher. The report concludes that without coordinated global action, the path to sustainable and inclusive development will continue to narrow.
–IMF/ChannelAfrica–
