02/11/2025 a keynote event was organized on the topic “Raising the ambitions of the FfD4 zero draft: the UN Framework Convention on Sovereign Debt”) as part of the preparation of the Financing for Development 4 Prep Comm III (FfD4 Prep Comm III) in New York, USA.
Below is the speech of Chinara Aitbaeva, director of the Our Century Foundation during the side event on 02/11/2025. on the topic: Raising the ambitions of the FfD4 zero project: UN Framework Convention on Sovereign Debt”
Dear colleagues, thank you for the opportunity to speak.
Currently, many countries are experiencing a peak in foreign debt payments. Instead of directing money for development, countries are forced to meet their obligations and pay off debts.
Today we face the need not only to reform the global financial system, but also to put in place sustainable mechanisms to prevent crises related to sovereign debt.
The FfD4 Zero Project and the proposed UN Framework Convention on Sovereign Debt are an important step towards a fair and sustainable global economy.
We emphasize the “social consequences of debt burden.” Debt servicing should not jeopardize the state’s fulfillment of its responsibilities to the people. Kyrgyzstan, like many other countries, is forced to devote significant funds to paying off debts, while education, health care and social protection remain underfunded. We consider it unacceptable that a country is forced to spend more on paying off debts than on developing human capital.
Civil society participation is also important to promote transparency.
Existing debt restructuring mechanisms, such as the Paris Club or G20 initiatives, have not been effective enough. They are voluntary, dependent on the goodwill of creditors, and do not provide fair and predictable solutions for debtor countries.
The Convention should be a “legally binding international instrument” that will ensure:
- Debt transparency – Lender and borrower countries must provide full and open information about their agreements.
- Clear and predictable procedures for resolving debt crises – instead of protracted negotiations, fair arbitration mechanisms are proposed.
- The principle of proportionality – debt restructuring must take into account the real ability of countries to pay obligations without compromising social and economic development.
- Prioritize sustainable development – any restructuring must be consistent with the goals of the UN 2030 Agenda for Sustainable Development.
It is important to note the role of civil society in promoting transparency.
How to strengthen the ambitions of the FfD4 zero project?
For the Convention to be effective it is necessary:
– Participation of all stakeholders – not only states, but also international financial institutions, private lenders and civil society.
– Global support – especially from advanced economies that play a key role in the international financial system.
– Creation of an independent international arbitration mechanism – which will guarantee a fair debt settlement process.
In conclusion,
Concerted efforts are needed to make the global financial system fairer, more resilient and more predictable. We must seize this opportunity to prevent further debt crises, support economic growth and build trust among countries.
It is necessary to “join forces” and work to ensure that the ambitions of the FfD4 zero project become a reality. The future of a fair global economy depends on our decisions today.
Thank you for your attention!