‘Buy now, pay later’ schemes are booming. But with more users turning to them, are they as risk-free as they seem?
“Buy now, pay later” has become a retail fixture seemingly overnight, and Cyber Monday is set to be the services’ biggest sales day yet. But as these payment options offer customers freedom and flexibility, are they also opening the door to a wave of unregulated debt?
Published On 28 Nov 202528 Nov 2025
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Heads of state from the world’s most powerful countries gathered in Johannesburg, South Africa, over the weekend for a summit that had been billed, under South Africa’s G20 presidency, as a turning point for addressing debt distress across the Global South.
South African President Cyril Ramaphosa had consistently framed the issue as central to his agenda, arguing that spiralling repayment costs have left governments, particularly in Africa, with little room to fund essential services like healthcare and education.
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But despite repeated pledges – including in the leaders’ summit declaration to “strengthen the implementation of the G20 Common Framework” – South Africa did not deliver any new proposals for easing fiscal constraints in indebted nations.
Hopes that world leaders would use the G20 summit to tackle sovereign debt distress were further dashed when United States President Donald Trump, at odds with South Africa over domestic policies, skipped the meeting altogether amid Washington’s retreat from multilateralism.
The summit also marked the close of a brief period of Global South leadership in the G20, following presidencies held by Indonesia in 2022, India in 2023, and Brazil in 2024. The US is set to assume the G20 presidency on December 1.
The G20 – which consists of 19 advanced and emerging economies, the European Union and the African Union – represents 85 percent of global gross domestic product (GDP) and roughly two-thirds of the world’s population.
In October, G20 finance ministers and central bank chiefs met in Washington and agreed to a consensus statement on debt.
“We recognise that a high level of debt is one of the obstacles to inclusive growth in many developing economies, which limits their ability to invest in infrastructure, disaster resilience, healthcare, education and other development needs,” the statement said.
It also pledged to “reaffirm our commitment to support efforts by low- and middle-income countries to address debt vulnerabilities in an effective, comprehensive and systematic manner”.
The communique committed to improving the much-criticised Common Framework, a mechanism launched by the G20 five years ago to accelerate and simplify debt restructuring – when countries have to reprofile debts they can no longer afford to repay.
Elsewhere, the statement advocated for greater transparency around debt reporting and more lending from regional development banks.
According to the Institute of International Finance, a banking industry association, total debt in developing countries rose to a record high of $109 trillion by mid-2025.
In recent years, COVID-19, climate shocks and rising food prices have forced many poor countries to rely on debt to stabilise their economies, crowding out other investments. For instance, the United Nations recently calculated that more than 40 percent of African governments spend more on servicing debt than they do on healthcare.
Africa also faces high borrowing costs. In 2023, bond yields – the interest on government debt – averaged 6.8 percent in Latin America and the Caribbean, and 9.8 percent in Africa.
Meanwhile, Africa collectively needs $143bn every year in climate finance to meet its Paris Agreement goals. In 2022, it received approximately $44bn.
At the same time, countries on the continent spent almost $90bn servicing external debt in 2024.
Shortly before the release of the G20’s final communique, 165 charities condemned the group’s slow progress on debt sustainability and urged President Ramaphosa to implement reforms before transferring the G20 presidency over to the US in December.
“While this year’s G20 has been put forward as an ‘African G20’, there is no evidence that any progress has been made on the debt crisis facing Africa and many other countries worldwide during the South African presidency,” the group said in a letter.
The missive called on the International Monetary Fund (IMF) to sell its gold reserves and set up a debt relief fund for distressed governments. It also backed the creation of a ‘borrowers club’ to facilitate cooperation among low-income countries.
The call for a unified debtor body reflects growing frustration with existing frameworks, notably the Paris Club, in which mostly Western governments, but not China, have exerted undue influence over the repayment policies of debtor nations.
In May 2020, the G20 launched a multibillion-dollar repayment pause to help poor countries cope with the COVID‑19 crisis. Known as the Debt Service Suspension Initiative, the programme is continuing to provide relief to some participating countries.
The launch of the Common Framework, soon afterwards, was designed to coordinate debt relief among all creditors. At the time, the initiative was hailed as a breakthrough, bringing together the Paris Club, China and private creditors to help prevent a full-blown debt crisis in developing countries.
But coordinating equal treatment, including government lenders, commercial banks, and bondholders, has made the process slow and prone to setbacks.
To date, none of the countries that joined the Common Framework – Ethiopia, Zambia, Ghana, and Chad – have completed their debt restructuring deals.
And even then, the programme has relieved just 7 percent of the debt costs for the four participating nations, according to ONE Campaign, an advocacy group.
In March, South Africa convened an expert panel – headed by a former finance minister and a former Kenyan central banker – to explore how to assist heavily indebted low-income countries, particularly in Africa.
In a report released earlier this month, the panel echoed many of the ideas put forward by the 165 charities that wrote to Ramaphosa in October, calling for measures like an IMF-backed special debt fund and the formation of a debtors’ club.
But the experts’ proposals “weren’t even acknowledged at the leaders’ summit”, Kevin Gallagher, director of Boston University’s Global Development Policy Center, told Al Jazeera. He said that the G20 presidency “failed to address the scale of the global debt problem”.
“Ultimately,” Gallagher added, “South Africa was outmanoeuvred by larger, more economically important members of the G20 who saw little benefit to themselves in reforming the international financial architecture on debt.”
In the early 2000s, the IMF, World Bank and some Paris Club creditors cancelled more than $75bn of debt – roughly 40 percent of external obligations – under the Heavily Indebted Poor Countries Initiative.
Since then, however, many developing countries have slipped back into the red. After the 2008 financial crisis, private creditors poured money into low-income economies, steadily replacing the cheaper loans once offered by institutions like the World Bank.
Between 2020 and 2025, almost 40 percent of external public debt repayments from lower-income countries went to commercial lenders. Just one-third went to multilateral institutions, according to Debt Justice, a United Kingdom-based charity.
China has also emerged as the world’s largest single creditor, especially in the Global South, committing more than $472bn through its policy banks – such as the China Development Bank and the Export-Import Bank – between 2008 and 2024.
“On top of debt becoming more expensive over the past 10 or 15 years, there is now a wider universe of lenders that developing countries have turned to,” says Iolanda Fresnillo, a policy and advocacy manager at Eurodad, a civil society organisation.
“It’s been a double whammy. Debt is now costlier and harder to resolve,” she said, noting the difficulty of coordinating creditors in a restructuring. Protracted debt crises slow growth by squeezing public investment.
Overcoming these hurdles is made harder when creditors pursue competing commercial interests. Fresnillo says an independent debt-restructuring body, designed to shorten negotiation times and limit economic costs, could help.
In September, the head of the UN Conference on Trade and Development (UNCTAD), Rebeca Grynspan, said, “There is no permanent institution or system that is there all the time dealing with debt restructuring … maybe we can create new momentum.”
However, talk of an international sovereign debt restructuring mechanism isn’t new. The IMF spearheaded a push for a neutral body – which would be akin to a US bankruptcy court – in the late 1990s.
The Fund’s proposed restructuring mechanism faced swift pushback. Major creditor countries, particularly the US, opposed ceding power to an international body that could override its legal system and weaken protections for US investors.
Still, “the need for this type of international solution is obvious”, says Fresnillo. “Having a basic set of rules, as opposed to an ad hoc negotiation for every new debt crisis, should be a bare minimum.”
She added that “adopting a global standard on taxing transnational corporations could also guarantee a baseline of revenues for low-income countries. But with multilateral cooperation so weak right now, I wouldn’t hold my breath.”
Ben ChuPolicy and analysis correspondent, BBC Verify
Getty ImagesChancellor Rachel Reeves’ upcoming Budget is expected to justify tax increases as a vital measure to keep the UK’s national debt under control.
Some have argued keeping the national debt down protects the financial interests of younger people. That’s because if the country’s debt went up drastically, it is younger people who would have to foot the bill to pay for the interest on it. And it would be taken directly from their payslips through higher taxes.
Generation Z, or those born between 1997 and 2012, have been hit in the pocket over the past 15 years by benefit cuts and dramatic increases in university tuition fees. Meanwhile, the homeownership rate of those born since the 1990s is well below that of earlier generations, due to the relative difficulty they have faced in getting on the housing ladder.
However, most politicians, including the chancellor, are also committing to keep paying for the triple lock on the state pension, which guarantees it rises each year by the highest of average wages, inflation or 2.5%.
There’s growing concern that current tax and spending policies help pensioners but are unfair on younger generations, and that the triple lock in particular will push up public spending and the national debt in the long term.
So will this budget really help younger generations? Or could it help saddle them with higher taxes and more debt?
BBC Verify has been looking at the numbers.
The UK’s national debt currently stands at just under 100% of UK GDP, which is the value of all the goods and services produced by the economy in a year.
The government’s official forecaster, the Office for Budget Responsibility (OBR), has warned it could rise above 250% over the next 50 years unless taxes are raised or public spending is reduced.
Some economists doubt such a steep and sustained debt surge would actually materialise, arguing it would likely trigger a bond market crisis long before then and see UK government borrowing costs pushed to extreme levels by private investors, which would instead force a change in tax policy or spending.
Yet the OBR says the purpose of its long-term projection is to highlight that the UK’s public finances are currently on what it calls an “unsustainable” trajectory.
The biggest driver of rising long-term spending, and therefore the increase in the national debt according to the OBR, is our ageing population, which means the government needs to spend more money on the NHS, social care and the state pension each year.
The number of people over 65 is projected to rise from 13 million to 22 million over the next five decades. That would push up the old age dependency ratio – the proportion of older people over the age of 65 relative to people aged 16 to 64 – from around 30% today to almost 50% by 2070.
Today the state pension age is 66, but for people born after 1990 it’s likely to be pushed higher to keep people working longer and reduce the old-age dependancy ratio.
Even so, the national debt would still likely increase significantly from today’s level because of these old age spending pressures.
Since 2010, government policy on benefits has tended to help older generations and to take money away from younger generations.
Over the past 15 years, the over 65s have received on average an extra £900 a year, while those under 65 have lost an average of £1,400 a year, according to calculations by the Resolution Foundation think tank.
The driving force behind this has been the value of the state pension increasing faster than average wages since 2010 because of the triple lock, alongside government cuts to working-age benefits, including housing benefits, unemployment benefits and universal credit.
The OBR projects that the triple lock will continue to push up state pension spending further in the coming decades.
If the state pension were only tied to increases in average wages then its share of GDP would only rise from 5% today to 6% in 2070, according to the OBR. But instead it projects the cost of the triple lock will push government spending on the state pension to nearly 8% over the next 45 years.
That might only be two extra percentage points, but it equates to around £60bn in today’s money, and it would be younger working age people who would have to pay for it through their taxes.
The impact on different age groups will depend on which taxes increase and which benefits are protected.
For instance, if high value homes were to face extra taxes, it would affect older people more as they tend to have greater property wealth.
If you look at earnings, pensioners still have to pay income tax but are no longer subject to employee National Insurance.
And younger people are deemed to have been hit harder by the increase in employer National Insurance contributions Rachel Reeves introduced in her first budget in October 2024, which appears to have slowed down job hiring rates.
All taxpayers have a shared interest in seeing the debt burden brought under control as a share of the size of the economy. Though one of the reasons the government borrows is to pay for investment in infrastructure such as roads and housing. Some economists warn that if ministers reduced that kind of spending and borrowing out of concern over the national debt it could prove counterproductive and ultimately damaging to younger people.
As for the triple lock, younger people could benefit from its continuation when they eventually retire themselves – and polling shows that 18-49 year olds are broadly in favour of keeping the policy.
Nevertheless, in the context of the past 15 years, many economists argue younger people also have an interest in seeing a rebalancing of the treatment of older and younger generations through the tax and benefit system.
A handful of opposition abstentions allowed Carney and minority Liberals to advance a deficit-boosting budget aimed at countering US tariffs.
Published On 18 Nov 202518 Nov 2025
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Prime Minister Mark Carney’s minority government narrowly survived a confidence vote on Monday as Canadian lawmakers endorsed a motion to begin debating his first federal budget – a result that avoids the prospect of a second election in less than a year.
The House of Commons voted 170-168 to advance study of the fiscal plan. While further votes are expected in the coming months, the slim victory signals that the budget is likely to be approved eventually.
Tonight, the House of Commons has voted to pass Budget 2025.
It’s time to work together to deliver on this plan — to protect our communities, empower Canadians with new opportunities, and build Canada strong.
— Mark Carney (@MarkJCarney) November 18, 2025
“It’s time to work together to deliver on this plan – to protect our communities, empower Canadians with new opportunities, and build Canada strong,” Carney said on X, arguing that his spending blueprint would help fortify the economy against escalating United States tariffs.
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Carney has repeatedly cast the budget as a “generational” chance to reinforce Canada’s economic resilience and to reduce reliance on trade with the US.
The proposal includes a near doubling of Canada’s deficit to 78.3 billion Canadian dollars ($55.5bn) with major outlays aimed at countering US trade measures and supporting defence and housing initiatives. The prime minister has insisted that higher deficit spending is essential to cushion the impact of US President Donald Trump’s tariffs. While most bilateral trade remains tariff-free under an existing North American trade agreement, US levies on automobiles, steel and aluminium have struck significant sectors of the Canadian economy.
According to Carney, a former central banker, internal forecasts show that “US tariffs and the associated uncertainty will cost Canadians around 1.8 percent of our GDP [gross domestic product]”.
The Liberals, a few seats short of a majority in the 343-seat House of Commons, relied on abstentions from several opposition members who were reluctant to trigger early elections. Recent polling suggested Carney’s Liberals would remain in power if Canadians were sent back to the polls.
Carney was elected to a full term in April after campaigning on a promise to challenge Washington’s protectionist turn. Meanwhile, the Conservative Party, the official opposition, has been wrestling with internal divisions since its defeat, and leader Pierre Poilievre faces a formal review of his performance early next year.
Poilievre has sharply criticised the government’s spending plans, branding the fiscal package a “credit card budget”.
The left-leaning New Democratic Party (NDP) has also expressed concerns, arguing that the proposal fails to adequately address unemployment, the housing crisis and the cost-of-living pressures faced by many Canadian families.
NDP interim leader Don Davies said the party accepted that blocking the budget would push the country back into an unwanted election cycle, explaining why two of its MPs ultimately abstained.
It was “clear that Canadians do not want an election right now … while we still face an existential threat from the Trump administration”, he said.
“Parliamentarians decided to put Canada first”, Finance Minister Francois-Philippe Champagne said.
Polling before Monday’s vote suggested Canadians broadly shared this view. A November survey by the analytics firm Leger found that one in five respondents supported immediate elections while half said they were satisfied with Carney’s leadership.
In a world where 3.4 billion people live in countries that spend more on debt interest than on health and education combined, the global financial system isn’t just flawed, it’s fundamentally unjust. This alarming reality formed the core of our conversation with Bodo Ellmers, Managing Director of Global Policy Forum Europe, following the recent UNCTAD 16 conference in Geneva. Against the backdrop of widening inequality and escalating debt distress across the Global South, Ellmers—a veteran policy expert with over two decades in the field—offered a stark diagnosis of the systemic failures in our international financial architecture and charted a path toward meaningful reform.
For Ellmers, the debt crisis represents a double-edged sword cutting through global development. “It squeezes fiscal space,” he explains, “constraining governments’ ability to finance public services and development.” This creates a vicious cycle where indebted nations must choose between servicing external debts and investing in their people’s well-being.
The impact manifests in two dimensions: nationally, through reduced spending on social protection, education, and healthcare; and internationally, as debt service payments flow from poor countries to rich creditors, effectively widening the gap between Global North and South.
When asked about characterizations of the international financial architecture as “neo-colonial,” Ellmers focuses on the concrete imbalances. The IMF and World Bank operate on a “one dollar, one vote” system that gives wealthy nations disproportionate power, with the US holding veto rights. Meanwhile, crucial financial regulation bodies like the OECD and Financial Stability Board exclude smaller developing countries entirely, despite setting rules with global impact.
The reform path remains blocked, Ellmers notes, because any meaningful redistribution of voting power would reduce US influence below its veto threshold. This impasse has forced regions to develop alternatives, from China’s new development banks to Africa’s proposed stability mechanism. Yet these solutions come with their own challenges, potentially creating new dependencies even as they offer welcome alternatives to traditional donors.
Perhaps the most glaring gap in the current system, according to Ellmers, is the absence of a fair sovereign debt restructuring process. Unlike corporate insolvency, where independent courts balance interests, indebted nations must negotiate from weakness with diverse creditors.
Ellmers advocates for a system that would prioritize human rights, ensuring that “a state needs to have the financial capacity to fulfill its human rights obligations towards citizens. This money cannot be touched by creditors.” This approach would fundamentally reorient debt negotiations from purely financial calculations to human-centered outcomes.
The conversation turned to climate finance, where Ellmers describes a “scandal” in the making. Wealthy, high-polluting nations continue to provide climate finance primarily as loans rather than grants, pushing vulnerable countries deeper into debt while addressing climate challenges they did little to create.
While mechanisms like Special Drawing Rights offer temporary relief, Ellmers sees them as treating symptoms rather than root causes. The deeper issue remains the voluntary nature of climate finance commitments and the reluctance of wealthy nations to provide adequate grant-based funding.
For activists and social movements seeking change, Ellmers emphasizes the need for dual strategies. The successful Jubilee campaign of the 1990s combined technical advocacy with mass mobilization, creating pressure that neither approach could achieve alone. This combination remains essential today, expert analysis must meet street-level mobilization to drive meaningful reform.
As Ellmers soberly concludes, “debt kills the SDGs.” With 3.4 billion people affected by this crisis, the need for structural reform transcends economic policy, it becomes a moral imperative for global justice and human dignity. The insights from our conversation paint an unambiguous picture: the current international financial architecture perpetuates inequality, undermines development, and fails to address interconnected crises from debt to climate change.
Yet within this challenging landscape, Ellmers’ analysis also reveals pathways for change. From institutional reforms that rebalance power toward Global South nations, to innovative mechanisms that protect human rights in debt restructuring, to the powerful synergy between grassroots mobilization and technical advocacy, the tools for transformation exist. What’s needed now is the political will to implement them.
Ellmers’ analysis leaves us with a crucial takeaway: the power to change this system lies in a combination of technical precision and unrelenting public pressure. The solutions—from a sovereign debt restructuring mechanism that protects human rights to shifting climate finance from loans to grants—are within reach. What has been missing is the political will to implement them. That will must be forged, and it must be forged now. The future of global justice, and the lives of billions, depend on it.