Indian Prime Minister Narendra Modi underscored the threat being faced by debt-ridden developing nations as finance chiefs from the Group of 20 kicked off their meetings. 

“Financial viability of many countries is threatened by unsustainable debt levels,” Modi said in a virtual address on Friday (Feb 24) to the G20 leaders. “It is now up to you – the custodians of the leading economies and monetary systems of the world, to bring back stability, confidence and growth to the global economy.”

Issues around debt restructuring of emerging nations such as Sri Lanka and Zambia are at the centre of discussions in Bengaluru, as officials try to reach a common ground on the matter. The pandemic ravaged the economies of emerging markets, forcing some of them to knock on the doors of global lending institutions for bailouts. 

Modi acknowledged “it’s not an easy task”, but urged the nations to work collectively to strengthen multilateral banks for meeting global challenges like climate change and high debt levels.

“Trust in international financial institutions has eroded. This is partly because they have been slow to reform themselves,” he said.

Separately, the United Nations said the prospect of higher interest rates globally was making it tougher for more developing countries to service debt.

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“We, as the United Nations, are very much here to make the call for urgent injection of liquidity into the global economy, which is on the agenda,” UNDP Administrator Achim Steiner told Bloomberg Television on the sidelines of the G20 meet.

Steiner also called for debt restructuring because the level that some nations are facing is “simply not sustainable.” He also called for the need to look at debt rescheduling and incentives for investment.

Modi’s address, which came at one-year mark of Russia-Ukraine war, highlighted some of the geo-political tensions, though he refrained from naming any countries. 

In a divergence from the consensus reached by G20 leaders in Bali last November, India is seeking to avoid the use of word ‘war’ in any statements, a person familiar with the matter said.

That comes as the trade links between India and Russia strengthen, with New Delhi boosting purchase of discounted oil from Moscow. BLOOMBERG