Trevor Manuel joins coalition calling for fairer debt relief for developing nations

Former Finance Minister Trevor Manuel has joined a coalition of leading global economists and policymakers in urging the International Monetary Fund (IMF) and the World Bank to overhaul their approach to debt held by poor countries.

"It would be a massive game changer. The problem is that too many countries face the challenge - they default. There are some countries that avoid the actual default against the banks but then default against their people. So, the issues like understanding of health, education and general social protection across the continent are the manifestations of that. It has to be a development default rather than the default on the banks, and this is growing in leaps and bounds, and it's deeply, deeply worrying for us."

The group's campaign is advocating for fairer terms and significant relief for nations that allocate up to 17% of their revenue to servicing external debt, which leaves little for education, healthcare, or development.

Manuel criticises the unequal treatment of developing nations, citing the United States' $20 billion bailout of Argentina as an example of double standards within the global financial system.

He argues that the world’s post–World War II financial order, dominated by wealthy nations, is long overdue for reform.

"The shareholding of the IMF is vested with the same wealthy countries, and they hang on to this. It was wrong in the beginning in 1944 at Bretton Woods, and it has become increasingly wrong over the period.

"You aren't able to kind of move the diode immediately. It's going to take a monumental effort to change that."

Manuel warns that if developing countries remain trapped in unsustainable debt, global stability could be at risk.

To listen to Trevor Manuel in conversation with 702's Bongani Bingwa, use the audio below: