FfD4 at Sevilla Plants the Seeds of Debtor Unity

By Michael Galant
NEW YORK, Jul 4 2025 – UN Member States adopted the ‘Compromiso de Sevilla’ at the Fourth Financing for Development Forum (FfD4) which concluded July 3– the culmination of months of contentious negotiations that pitted wealthy nations against the developing world in competing visions for reform of the global economic architecture.

The wide-ranging outcome document will be met with both fanfare — from the host countries and UN officials keen to portray the process as a success — and criticism — from civil society groups lamenting the watering down of material commitments into so many toothless words. But buried in its 38 pages is a single paragraph that quietly plants the seed for a more transformative agenda:

We will establish a platform for borrower countries with support from existing institutions, and a UN entity serving as its secretariat. The platform may be used to discuss technical issues, share information and experiences in addressing debt challenges, increase access to technical assistance and capacity building in debt management, coordinate approaches, and strengthen borrower countries’ voices in the global debt architecture.

Uniting borrowing countries has long been a dream of those concerned with the imbalance of power in the global financial system. Creditors are organized into collectives like the Paris Club, they argue; so too should debtors work together to build collective negotiating power, underwritten by the threat of a coordinated default.

With two thirds of low-income and a quarter of middle-income countries in or near debt distress, a common negotiating front could not only obtain better terms of restructuring during times of crisis, but also bolster demands for lasting reforms of a failing system that keeps countries trapped in a vicious cycle of debt and underdevelopment.

This is easier said than done.

Developing countries, and the economic elites that typically govern them, are dependent on international finance, and reluctant to do anything that might spook financial markets. Simultaneously overcoming these fears in multiple countries, each with their own contexts and interests, is a tall order.

The FFD document thus conspicuously avoids the language of a “debtors’ club” or any threat of collective negotiation or default, leading instead with more neutral modes of cooperation like information-sharing and capacity-building. But even tentative steps toward cooperation can have a meaningful impact. Indeed, they have before.

In June 1984, eleven Latin American countries met in Cartagena, Colombia to coordinate their responses to the debt crisis that had by then roiled the region for two years. The resulting Cartagena Consensus was clear that it was not a “debtors’ club,” but a forum for collaboration. The group would meet five times in the years that would follow, developing common positions on the source of the crisis and the terms of its resolution.

The Cartagena Consensus is often held up as a cautionary tale for debtors considering coordination. The Group never became a fully realized “debtors’ club” capable of collective negotiation, and petered out before the crisis was resolved as creditors peeled away desperate debtors with sweetheart deals.

But even the tacit threat that a club could be in formation bore fruit. Principles developed collectively shaped early deals, the concessions from which bolstered the positions of subsequent negotiators, and less confrontational governments benefitted from gains won by the more radical.

As scholar Diana Tussie wrote at the time: “a significant improvement in the cost of the negotiated credit was achieved, spreads were reduced, rescheduling fees were drastically reduced, the cost of the loan was reduced, and the amortization period increased significantly.”

Rhetorically, the Consensus helped recast the crisis as a political one, rooted in global financial inequities and exogenous factors like rising interest rates in advanced economies, rather than a purely technocratic or moralistic question of responsible spending.

Today’s multilateral commitment to form a borrowers’ platform has advantages that Cartagena did not. While the developing world is facing a generalized debt crisis, it is not in the acute situation that beset the Cartagena Consensus, and so has an opportunity to gradually build its infrastructure under less desperate conditions.

The borrowers’ platform is to operate with UN support and a wider range of global participants. And the emergence of major new bilateral creditors, though not without its own challenges, may strengthen debtors’ negotiating hands.

Of course, the global debt challenge cannot be reduced to a zero-sum restructuring negotiation. Substantive reforms are needed to address the many faults in the debt system, from ongoing legislative efforts to combat creditor holdouts in Albany, to the establishment of a permanent multilateral sovereign debt workout mechanism — a top priority of debt relief advocates.

Yet these efforts have repeatedly been blocked by the intransigence of creditors. Movement toward reform will only be strengthened by the coordination of the countries that stand to benefit most.

A promise to establish a borrowers’ platform is far from a fully realized debtors’ club, and farther still from a panacea to the Global South’s ongoing debt crisis. But in a document short on transformative ambition, it is a concrete step toward the rebalancing of unequal power relations — and a sign that debtor countries will not submit themselves to creditor inaction forever.

Michael Galant is Senior Research and Outreach Associate at the Center for Economic and Policy Research (cepr.net) in Washington, DC.

IPS UN Bureau

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