<h6><strong>Eduardo González</strong></h6> <h4><strong>This Tuesday in Seville, within the framework of the 4th UN International Conference on International Development Financing (DDF4), President of the Government Pedro Sánchez presented two initiatives for the creation of a Debt Swap Hub and an Alliance for Debt Suspension Clauses to help vulnerable countries move toward more sustainable development.</strong></h4> The Prime Minister presented these two initiatives at the special Spain-South Africa event "Forging a Common Agenda to Achieve Debt Sustainability in Developing Countries," held at the Seville Conference and Exhibition Center (FIBES) and attended by the Minister of Economy, Trade, and Business, Carlos Cuerpo. During his speech, Sánchez advocated for a "profound change" in the international debt architecture through "ambitious and innovative solutions based on international cooperation and solidarity" that would transform this financial instrument into "an engine of investment, resilience, and stability" for developing countries. To this end, the President of the Government outlined some of Spain's proposals on debt. The first of these, he explained, is the "creation of an Alliance for Debt Suspension Clauses," a coalition of countries and institutions that would commit to promoting support from public and private creditors for the implementation of debt suspension clauses in order to provide more fiscal space for vulnerable countries in times of crisis. This alliance, he specified, would bring together debtor countries, creditors, multilateral banks, the private sector, and credit rating agencies with the aim of providing greater consistency and scope to these clauses—which temporarily suspend debt service payments in the event of natural disasters and crises—and to promote Their regular inclusion in loan contracts, both public and private, so that developing countries do not face liquidity crises and default. According to Sánchez, the Alliance already has the support of countries such as France, the United Kingdom, Canada, and Barbados, as well as institutions such as the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the Development Bank of Latin America and the Caribbean (CAF), and the European Investment Bank. In a press conference, Carlos Cuerpo explained that the objective of this initiative is to create immediate fiscal space in times of greatest need and allow countries to focus their resources on response and recovery without jeopardizing their solvency or their ability to meet their social spending. Secondly, Sánchez announced an initiative to create a Global Hub for Debt-for-Development Swaps within the World Bank, a tool that would allow "tackling two challenges at once: alleviating the debt burden and redirecting resources toward investments in climate action, sustainable infrastructure, health, and education." This hub, he added, would serve as a platform for sharing experiences, generating knowledge, and developing technical capacity. Likewise, it would help "create common approaches to swaps," support "their design and implementation," and promote "their adoption by both official and private creditors." <h5 class="lRu31" dir="ltr"><strong><span class="HwtZe" lang="en"><span class="jCAhz ChMk0b"><span class="ryNqvb">National mechanism</span></span></span></strong></h5> <div id="ow1059">Pedro Sánchez also assured that "Spain will launch a national mechanism that will allow channeling up to 60 million euros annually in debt relief for developing countries." These resources, he specified, "will be reinvested directly and transparently in sustainable development programs."</div> Finally, Sánchez reported that Spain will support a proposal championed by the Jubilee Commission (created in February 2025 by the Pontifical Academy of Social Sciences and the Policy Dialogue Initiative at Columbia University to propose solutions to combat the debt and development crisis affecting dozens of countries around the world) for the creation of a multilateral fund that would allow countries to buy back their own debt at a discount on secondary markets. “Instead of allowing these assets to end up in the hands of speculative investors, we should help and facilitate the countries themselves to buy back their debt at reduced prices, thus lightening their financial burden and freeing up resources for development,” the president warned. To this end, this fund, initially proposed by Spain, could be backed by Special Drawing Rights (SDRs) to provide loans on favorable terms to developing countries that qualify for them. “This is a realistic proposal. It is aligned with social justice and consistent with the goal of building a more resilient and fair global financial architecture,” he asserted.
