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The Commonwealth plays a vital role in helping countries to achieve economic stability through effective debt management.

Managing debt effectively and sustainably

The challenge

Unsustainably high debt cripples economies and impoverishes people. Globally, debt has increased by more than 40 per cent in the seven years following the 2007–2008 financial crisis and is still growing. Debt as a proportion of gross domestic product increased by eight per cent in Africa, six per cent in the Pacific and 15 per cent in the Caribbean between 2008 and 2014. In some Commonwealth countries it exceeds 100 per cent of GDP.

Weak institutional structures and limited access to funding from domestic and international markets means that many Commonwealth countries currently lack the capacity to effectively manage their debt.

Commonwealth software manages a global portfolio of more than $2.5 trillion of public debt.

Commonwealth action

The Commonwealth has been addressing sovereign debt since the 1980s. We have contributed to major initiatives including the Paris Club, which focused on solving the payment difficulties of debtor countries, and the Naples Terms, which increased the amount of debt relief to poorer countries. In the 1990s, a proposal initiated by the Commonwealth and supported by the International Monetary Fund culminated in the Heavily Indebted Poor Countries Initiative to provide relief and low-interest loans to cancel or reduce the debt of the poorest countries.

Today, we provide policy advice, capacity-building and advocacy support to member countries, helping them to sustainably manage their public finances. Our Debt Recording and Management System allows managers to access and evaluate information on long-term, short-term, public and privately-secured external and domestic debt. Other software solutions we provide include the Securities Auction System, which supports the auctioning of government securities, and Horizon, a public debt analytical tool.

Global value

The Commonwealth’s advocacy work has contributed to vital debt relief for some of our poorest member countries, including 36 countries which have benefited from the Heavily Indebted Poor Countries Initiative.

Our Debt Recording and Management System manages a global portfolio of more than $2.5 trillion of public debt, ensuring that countries assume debt with a prudent degree of risk and that they can meet their payment obligations at the lowest possible cost.

In total, more than 100 government agencies including ministries of finance, treasuries and central banks in over 60 countries – including 15 non-Commonwealth members – have benefited from our debt management programme.