International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, has called on the international community to strengthen the debt architecture and improve the speed and effectiveness of debt resolution for Ghana and other developing countries.
According to her, it has become critical to establish a Creditor Committee for Ghana, complete Zambia’s debt restructuring, and advance work with Ethiopia.
Ms. Georgieva stated at the first meeting of the G20 Finance Ministers and Central Bank Governors in Bengaluru, India, that with global growth expected to slow in 2023 and remain below its historical average, too many people in too many countries are struggling to make ends meet.
“The international community, therefore, has a responsibility to come together to find solutions for the most vulnerable members of our global family. This calls for urgent action to strengthen the international financial architecture, especially in the area of debt resolution and strengthening the global financial safety net,” she stated.
The IMF boss added, “Sovereign debt vulnerabilities, already elevated before the pandemic, have been exacerbated by the shocks stemming from COVID-19 and Russia’s war against Ukraine.
She emphasised that this is especially true for developing and low-income countries, which have limited policy space and significant development needs.
She pointed out that the G20 did so in 2020 by establishing the Debt Service Suspension Initiative (DSSI) and the Common Framework (CF) for debt resolution.
“Since then, the CF delivered a debt operation for Chad. It is now critical to complete Zambia’s debt restructuring, establish a Creditor Committee for Ghana, and advance work with Ethiopia,” the IMF Chief stressed.
Ms. Georgieva, nonetheless, indicated that more predictable, timely, and orderly processes are needed both for countries under the CF and for those not covered by it, including Sri Lanka and Suriname.
“This means that we must enhance dialogue and collaboration on debt issues. This is the goal of the new Global Sovereign Debt Roundtable (GSDR): to bring together creditors—official, old and new, and private—and debtor countries to discuss key issues that can facilitate the debt resolution process,” she intimated.
She continued, “We launched the GSDR under the auspices of India’s G20 presidency last week at the deputies’ level, followed by an engaged and constructive principals meeting earlier today.”
“We will further build on this discussion during the World Bank-IMF Spring Meetings in April,” she announced, adding that “in our role at the centre of the Global Financial Safety Net, the IMF has been scaling up lending as our members confront the significant economic challenges that the past few years have brought.”
“Through our standard lending facilities and emergency financing, the IMF has approved $272 billion of financing to 94 countries since the beginning of the pandemic, of which 57 are low-income countries.
“We have also stepped up our efforts to help tackle the global food crisis. Several countries have benefited from the IMF’s new Food Shock Window, including Malawi, Guinea, and Haiti, and more are expected to do so,” she revealed.
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