G20 Faces Criticism Over Climate Debt and Inequality

The Group of Twenty (G20) emerged following the financial turmoil that resulted from the collapse of the Thai currency in 1997, a crisis that rapidly spread instability across Asia. Finance ministers and central bank governors convened at that time to develop a strategy for stabilizing the global economy and preventing future crises, aiming to establish a forum for maintaining global economic stability.

The G20 today is a voluntary international forum that includes the advanced capitalist nations of the Group of Seven (G7) – Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States – along with the G7’s European Union allies, and the emerging and developing economies of Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Türkiye, and the African Union in 2025.

Origins and Core Purpose

The G20’s origins lie in its formation as a forum for finance ministers and central bankers, initially designed to safeguard the global capitalist financial system. Its core purpose was to bring governments together to facilitate the free flow of money and prevent the collapse of capitalism. This focus is reflected in the G20’s most decisive agreements since the 2008 global financial crisis, which have largely occurred when the capitalist system required intervention.

A prime example is the coordinated response to the 2008 crisis, where the US Federal Reserve led governments in purchasing government and commercial bonds and assets to inject money into the economy. This strategy had global repercussions, as central banks maintained artificially low interest rates to encourage borrowing. However, corporations primarily used this cheap money for stock market and property investments, creating asset bubbles that posed a risk of collapse. The influx of capital into developing countries also led to inflation, prompting governments to cut spending and raise interest rates, impacting ordinary citizens.

Capital in capitalist economies can be deployed productively, fostering factory development, infrastructure expansion, and job creation. Alternatively, it can be deployed speculatively, generating profit from profit. The G20’s legacy has been to prioritize the preservation of capitalist financial systems over the equitable and sustainable development of the economy.

South Africa’s 2025 G20 Presidency

South Africa, like many nations, has become increasingly over-financialized, with speculators prioritizing profit-seeking over investment in productive enterprises. This has resulted in a devastating human cost, with nearly one-third of South Africans officially unemployed (31.9%). Statistics South Africa has introduced a new indicator that measures unemployment, underemployment, and discouragement from job-hunting, revealing that just under half (44.9%) of the working-age population is being left behind.

Addressing the Current Crises

The G20 has been criticized for failing to recognize or address accelerated climate change, spiraling indebtedness, and profound inequality, which are overlapping crises intensifying each other. This inaction is particularly concerning given rising social tensions and political instability, as well as the continued deterioration of the environmental situation.

What Needs to Happen Next

It is argued that the G20 has fulfilled its original purpose: to help protect and stabilize a capitalist system inherently prone to crises. However, in a world facing overlapping crises, the G20’s statements lack transformative action.

Addressing climate change requires urgent action, including transitioning to green energy and investing in climate adaptation. African countries, burdened by debt, cannot undertake this transition without assistance. Several steps are necessary, including:

• Ending the practice of African countries spending more on debt repayment than on essential services like health, education, and security. Wealthy countries must fulfill their development aid commitments instead of exacerbating debt through climate loans.
• South Africa should work with nations and associations that genuinely support it, developing a community of nations based on empathy. It should also rally working-class communities in the global north to join this effort.
• Ending the influence of private credit rating agencies that unfairly penalize poorer countries, hindering their ability to borrow money.
• Channeling development finance to climate adaptation projects in the global south.

The African Union and other African forums should replace outdated global structures where countries like the US dominate. The African Union, representing the world’s most excluded countries, must work together to ensure the continent has a unified global position on critical economic issues, including climate finance, debt justice, and development aid.