IMF: financial leaders to seek debt solutions for G20

World finance and banking leaders will discuss how to address the bottlenecks preventing rapid debt restructuring for fragile nations when they meet in India next week, a senior official at the International Monetary Fund has said.

Fiscal and monetary officials heading to Bangalore next week will seek consensus on deadlines and deadlines, as well as projections in debt analyses, allowing lenders and borrowing countries to agree on key principles and find solutions, said Ceyla PazarbasiogluDirector of the IMF’s Department of Strategy, Policy, and Review.

In-person meetings on the sidelines of Group of 20 meetings in India will follow this week’s virtual meeting of deputies to address global debt issues.

He IMFthe World Bank and 2023 G20 leader India are bringing together creditors, including Chinawith borrowing countries to try to find solutions for nations with unsustainable debt levels.

The hope is that by bringing together a wide range of stakeholders, including creditor countries, borrowing countries and commercial lenders, the IMF and the world Bankan understanding will be created to advance broad shared goals and strategies that can then be applied to specific cases of distressed debt, Pazarbasioglu said.

Reaching a consensus has been difficult: the plan of the G20 to restructure loans, known as the Common Framework, has so far proved ineffective amid disagreements between traditional Paris Club banking nations and China, now the largest bilateral bank for developing countries.

He IMF wants “bring everyone together and try to reach consensus on a platform that is shared, that is balanced, that includes different creditors who have different experiences. So that’s the ideaPazarbasioglu said.

The frame of the G20 it brings together the Paris Club of mostly Western traditional creditor countries along with China, India and Saudi Arabia to restructure the debt of troubled countries on a case-by-case basis.

While many countries need help, few have chosen to rework debt through the framework of the G20: Ethiopia and Zambia are in the process of negotiating agreements, while Ghana recently announced that it is seeking relief under the plan. Chad is the only nation that has completed a restructuring according to the plan.

Other countries, such as Sri Lanka, are working on debt restructurings outside the framework of the G20.

Debt restructurings can be accomplished in multiple ways, including through immediate haircuts or long-term concessional loans with long grace periods, he said. pazarbasioglu. He IMF He will seek to reach understandings on how countries can come together for the shared goal of debt relief, he said.

About 60% of low-income countries are already in debt distress or at high risk of becoming so, according to data from the IMFwhich increases the urgency of having a functional framework to deal with debt equitably.