Rockefeller Foundation proposes debt relief plan for developing nations

The Rockefeller Foundation and development experts have proposed a new initiative called the ‘Growth and Investment Reset’ to assist heavily indebted developing nations. The plan aims to prevent deep debt distress in approximately 40 low- and lower-middle-income countries by coordinating efforts between the International Monetary Fund (IMF), the World Bank, bilateral official creditors, and private lenders.

Developing nations are currently facing unprecedented interest burdens. On average, interest payments now exceed 10% of revenue in these countries, and in ten specific nations, interest outlays have surpassed total public investment in areas such as infrastructure, education, and health. The crisis is exacerbated by a ‘wall’ of low-cost, COVID-era external borrowing that is coming due just as global borrowing costs have risen sharply.

The proposal suggests that the IMF establish a separate, long-term, and affordable financing program, while the World Bank increases its credit and guarantee capacity. Additionally, the plan seeks to encourage bilateral creditors, such as China, to extend debt maturities and assist in refinancing private sector debt at lower costs. This would prevent countries from using low-interest multilateral loans to pay off existing debts to bilateral creditors. The authors intend to seek political agreements through the G20 framework.