Opinion

Friday, December 05, 2025 | Daily Newspaper published by GPPC Doha, Qatar.
Gulf Times

The G20 must follow through on debt relief

As G20 leaders met in Johannesburg last month, they faced a grim reality: many developing-country governments are spending more than they can afford on debt service. To keep funds flowing to foreign creditors, policymakers have been forced to cut spending on education, healthcare, and infrastructure. These countries have so far avoided default, but at the expense of their own development.The fact that governments across Africa, Asia, and Latin America must close hospitals and cancel school-lunch programmes to service their debt is not only a moral failure; it is also a strategic one. A world where countries cannot invest in sustainable growth and development will struggle to achieve stability, prosperity, and climate resilience.Five years ago, amid the Covid-19 pandemic, the G20 launched the Common Framework for Debt Treatment to help heavily indebted countries restructure their debts in an orderly, prompt, and equitable manner. But the promised relief has not materialised. According to the International Monetary Fund and the World Bank, 37 out of 67 low-income countries eligible for concessional funding are in or at high risk of debt distress, yet only four – Chad, Zambia, Ghana, and Ethiopia – have applied for restructuring under the mechanism. Their experiences have revealed the weaknesses of the Common Framework: it offers far too little relief – and too late.In response, the G20 has outsourced the problem to technocratic bodies, tasking them with accelerating the process and increasing relief. While this technical work is important, it is not enough. Debtor countries still fear that the policy is half-hearted. Policymakers now talk less about a “debt crisis” and more about a “debt morass” – a world where everyone is stuck, waiting for a change that never comes.Meanwhile, foreign private creditors have been withdrawing their capital from developing economies since 2022. The message is clear: the risks are too high, and no meaningful solution is in sight. When investors leave, governments are left scrambling to borrow from other sources.Multilateral development banks (MDBs) and the IMF have come to the rescue. As a result, their share of developing countries’ external debt has soared, exceeding 75% in around 20 countries. This creates a vicious cycle: when multilateral organisations that don’t take a haircut in restructurings hold most of a country’s sovereign debt, private creditors become even more reluctant to invest.To escape the debt morass, G20 leaders must restore confidence in the Common Framework and act with a sense of urgency. That means reassuring debtor countries that applications for relief will be handled quickly, fairly, and generously. The recent G20 leaders’ communiqué, and their finance ministers’ declaration on debt sustainability, merely reiterated the technical work and thus fell short of what is needed. Stronger commitments must be backed by tangible action.First, G20 leaders must reduce the stigma of restructuring. When debt becomes a drag on growth, seeking relief and committing to reform should be seen as responsible economic governance.Second, relief must be meaningful. A token reduction that leaves countries with still-limited fiscal space only prolongs the crisis. G20 leaders must proactively replenish debt-relief funds. While taxpayers in high-income countries, many with their own ballooning debts, may balk at these costs, continuing to bail out private creditors indirectly through MDBs is also expensive. The sooner debt relief is provided, the cheaper it will be.Third, private creditors should be required to do their part. Based on the comparability-of-treatment principle, every dollar of debt relief from official creditors must be matched by private creditors. G20 leaders must support national legislation that enforces this policy. The self-regulatory approach taken over the past two decades by bondholders has not worked with other private creditors – and all it takes is a single holdout creditor to scupper a debt-restructuring process.Some argue that debt relief will make borrowing more expensive for debtor countries in the future. The reality is their borrowing costs are already prohibitively high. Cleaning up their balance sheets would attract investors more quickly than implementing austerity measures. Investors, having incurred losses, will become more discerning and demand risk premiums from countries that fail to improve their debt management – a welcome incentive for good governance.The G20 must contend with a confluence of geopolitical, climate, and economic shocks. But the developing world’s debt morass cuts across them all. Only by addressing this underlying challenge can we hope to overcome all the others. G20 leaders have already committed to debt relief. Now they need the courage to finish the job.  


Officers from the Disaster Victims Identification Unit (DVIU) working inside an apartment block in the aftermath of a fire at the Wang Fuk Court residential estate in Hong Kong’s Tai Po district. (AFP)

Hong Kong’s deadliest fire in decades followed a year of safety complaints

Residents of the housing complex that was engulfed in Hong Kong’s deadliest blaze in seven decades were told by authorities last year that they faced “relatively low fire risks” after complaining repeatedly about fire hazards posed by ongoing renovation works, the city’s Labour Department told Reuters. People living at Wang Fuk Court in northern Hong Kong had raised concerns over maintenance activity in September 2024, including about the potential flammability of the protective green mesh contractors had used to cover the bamboo scaffolding raised around the buildings, a department spokesperson said in an email.The department subsequently reviewed safety certification for the mesh, which was used as a net for falling debris, and told residents the material’s “flame-retardant performance” met standards, said the agency, which helps enforce construction standards set by the Building Department.Hong Kong police said on Thursday, however, that the exterior walls of the complex’s buildings “had protective nets, membranes, waterproof tarpaulins, and plastic sheets suspected of not meeting fire safety standards.” Three people associated with renovation contractor Prestige Construction have been arrested on suspicion of manslaughter.The exact cause of Wednesday’s inferno, which has claimed at least 128 lives, has not been determined.What is clear, however, is that the fire spread rapidly through the renovation infrastructure outside, said Jiang Liming, a fire-safety expert at Hong Kong Polytechnic University who reviewed video footage of the blaze.Jiang said early observations of the fire did not take into account the foam boards over windows.Prestige, which secured a HK$330mn ($42.4mn) renovation contract for the complex in January 2024, did not respond to repeated calls. The three arrested people, who authorities have not named, could not be reached. Metal shutters were pulled down over the entrance of Prestige’s office when a reporter visited on Friday morning.Asked about the Labour Department’s review of the mesh’s safety certification, Hong Kong police referred to a Thursday statement in which it said it would “gather evidence and conduct a thorough investigation to ascertain the cause of the fire” once the blaze was fully extinguished.The Labour Department told Reuters that when it told residents they faced low fire risks as long as processes like welding were avoided, that did not mean that potential hazards were ignored. It also said it had reminded the contractor to implement fire-prevention measures.The agency added that it had carried out 16 safety inspections at Wang Fuk Court between July 2024 and November 2025. The department issued six improvement notices to the contractor over its work at the complex and initiated three prosecutions, it said, without providing further specifics.Reuters could not determine the outcome of those proceedings or the firm’s response.Wednesday’s blaze spread at shocking speed.Firefighters were first alerted to fire at one of Wang Fuk Court’s towers at 2:51pm. Within the five minutes it took them to reach the site, the blaze had scattered across the scaffolding, entered the interior of the building and spread to other towers in the complex, according to a fire department statement.In about four hours, seven of the complex’s eight 32-story towers were engulfed in flames. Thick smoke made it hard for first responders to reach higher floors.Hundreds of the 4,600 people living in the complex were placed in temporary shelter. About 200 were missing as of Friday.Jiang, an assistant professor at Polytechnic University’s department of building environment and energy engineering, compared the blaze to London’s 2017 Grenfell public-housing fire, in which 72 people died.A subsequent investigation revealed failings by the British government, the construction industry and firms involved in fitting the building’s exterior with flammable cladding.“It’s a very similar kind of fire travelling mechanism: from the facade, the fire then entered the rooms” of apartments, he said.Hong Kong leader John Lee has said the government will review the use of bamboo scaffolding. The Building and Labour departments separately said Thursday that they would be conducting emergency checks on buildings undergoing renovations to ensure that scaffolding and nets meet fire-safety standards.Police on Wednesday also said they had discovered foam at the complex that might have been responsible for the fast expansion of the fire.Facebook user Peter Leung had posted photos of burning white material on the “Wang Fuk Court Resident Exchange” group in September 2024, alongside the caption: “the window insulation is flammable.”Leung did not respond when contacted by Reuters via Facebook.Foam “burns quickly and produces thick, toxic smoke,” Chau Sze Kit, chairman of the Hong Kong Construction Industry Employees General Union, told Reuters.The material can help prevent dust and glass damage to windows during construction, he said, but “did the management team and site supervisors consider this risk?”Resident Tommy Au Wai-chi said foam installed near their windows prevented his parents from noticing the giant flames and heavy smoke outside their home.“They didn’t realise there was a fire until I called them,” said the 58-year-old truck driver. His parents were rescued and are in a stable condition in hospital.Chris Wong, who on Thursday was still waiting for news of her 72-year-old mother, who she believes remains trapped, expressed anger at how her apartment’s windows were blocked with foam.“The government has laws, but do they enforce on the quality of materials and safety? I have my doubts.”A Reuters review of the minutes of meetings held over the past year between homeowners and building management revealed additional fire-safety concerns.Management told the homeowners’ committee in October 2025 that among the items needing repair or maintenance in the complex were fire water inlets, hose components such as fire nozzles, fire alarm bells, fire extinguishers and fire hose reels, as well as lighting fixtures with batteries.In July 2025, the committee was also told that “some hoses inside the fire tanks showed signs of aging and corrosion during waterproofing work.” Meeting participants recommended replacing the hoses.And in November 2024, the committee expressed concern that the number of solar panels on the towers’ rooftops “might violate fire safety regulations.” It suggested consulting the fire department. Reuters could not determine if action had been taken to address those concerns. Hong Kong Security Chief Chris Tang said on Friday fire alarms in the complex had not been working properly, confirming earlier complaints from some residents.The management of Wang Fuk Court did not respond to calls and an e-mail.Residents have also complained about contractors smoking around the scaffolding.Jacky Cheung, who described himself as a former resident in the complex, sent Reuters a video he said he had taken that depicted a construction worker smoking next to the scaffolding. The news agency was able to verify that the video was shot at Wang Fuk Court, but not the exact date it was taken.Cheung said he had complained about smoking incidents and sent management the video in February, but that they did nothing in response. — Reuters