Italy commits to slashing debt of low, and middle-income countries by half in 10 years

Italy has unveiled an ambitious debt-relief plan aimed at easing the financial burden on low- and middle-income countries, declaring that sustainable development cannot be achieved without addressing the crushing debt many nations face.

Africa faces growing financing pressures as rising debt service costs severely constrain development. By the end of 2024, public debt to countries and multilateral financial instritutions had reached $1.815 trillion, while annual debt servicing climbed to $163 billion, leaving 57% of Africans living in countries where debt payments exceed health or education spending. 

The high level of debt is unsustainable and undermines efforts towards sustainable development and poverty alleviation. The G20 Ministerial Declaration on Debt Sustainability has signaled the intent of the G20 to do more to tackle unsustainable levels of debt alongside the rising cost of capital, particularly for African countries.

Speaking at the G20 Leaders' Summit in Johannesburg on Saturday, Italy’s Prime Minister Giorgia Meloni said the country would cut the debt owed by low- and middle-income countries by half over the next decade, marking one of the most significant commitments made by a G7 nation in recent years.

The initiative will also see Italy work towards converting all debt owed by the world’s least developed countries into investment financing directed at young entrepreneurs and development projects.

"So Italy has also decided to reduce the debt of low and middle-income countries by 50% over the next 10 years and above all to convert the entire debt of the least developed countries into investments planned for those countries, which is a choice I consider a choice of justice and responsibility that we hope others will follow," Meloni said.

Meloni framed the move as both a moral and strategic commitment, saying the global community could no longer ignore the “violence” of debt pressures that continue to undermine stability and growth in developing nations. She expressed hope that other advanced economies would join the initiative.

"We believe this is the right path to take in order to build development and we can do it together with humility and moreover with respect for the others."

The proposal forms part of Italy’s broader Africa-focused development agenda, which includes deeper cooperation with the African Union, the United Nations, and multilateral lenders such as the World Bank.

Italy has already partnered with the World Bank on a major programme aimed at expanding economic opportunities for African youth and improving living conditions in vulnerable communities.

The "Piano Mattei" is an Italian initiative focusing on economic, cultural, and institutional cooperation to address issues like migration, security, and sustainable development through projects in areas such as energy, agriculture, health, and infrastructure.

It has been presented as a new model for partnerships, though it has also faced criticism regarding its lack of consultation with African stakeholders and potential to perpetuate existing power dynamics. 

"It is a new way of looking at the African continent not as a problem but rather as an opportunity, not lecturing from top to bottom but with respect," Meloni said.

"This is an initiative that is already involving 14 African nations, a number we intend to increase every year, and that can count on well-built synergies with the African Union, the United Nations, international financial institutions, and the European Union with the Global Gateway. The results it is producing are facts." 

Meloni also underscored that meaningful development must allow young people—including the “thousands of young African people” seeking better futures—to build prosperity at home rather than being forced to migrate due to lack of opportunity.

"I think that nobody can really think to help the African continent simply accepting that hundreds of thousands of young African people pay traffickers to move towards Europe," she said.

"That is why together with Nigeria and in partnership with the Global Partnership of Education we've launched a campaign to raise $5 billion and improve the education of 750 million children in different nations.

"And, however, to build an Africa that is truly capable of competing on equal terms, we obviously cannot ignore the burden of debt that weighs many of the nations of these continents." 

During his opening address on Saturday, Ramaphosa reiterated that South Africa has identified four high-level priorities, including debt sustainability, at the beginning of its G20 Presidency.

We have agreed that it is essential for the global community, international financial institutions, development banks and the private sector, to scale up post-disaster reconstruction. 

"We agreed that we must take action to ensure debt sustainability for low-income countries. The G20 needs to renew its efforts to advance debt sustainability, with a particular emphasis on African countries," Ramaphosa said.

BUSINESS REPORT