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Focus on timelines, predictability at next sovereign debt roundtable, IMF chief says

Published 02/27/2024, 02:47 PM
Updated 02/27/2024, 09:41 PM
© Reuters. IMF Managing Director Kristalina Georgieva speaks during an interview on the day she attends G20 Financial Summit, in Sao Paulo, Brazil, February 27, 2024. REUTERS/Carla Carniel 

By Andrea Shalal

SAO PAULO (Reuters) -International Monetary Fund chief Kristalina Georgieva said on Tuesday she wants to shine a spotlight on the timelines and predictability of debt restructuring processes at the next meeting of the Global Sovereign Debt Roundtable in April.

Georgieva told Reuters she hoped to make progress on the issue when the roundtable - which includes debtor countries and official and private creditors - meet in Washington in April during the spring meetings of the IMF and the World Bank.

"Do we see scope for improvement? Yes. And we would like to use the next Global Sovereign Debt Roundtable in the spring to talk about predictability and timelines, because this is where the biggest difficulty for the debtor countries is," she said in an interview before a meeting in Brazil of finance officials from the Group of 20 major economies.

"Everything takes much longer than countries need and expect," she said.

Georgieva declined to give specific timelines, but said panel participants would work to define specific steps in a debt restructuring process and then set a "maximum time" for completing that step.

Despite long delays in ongoing debt restructuring processes, Georgieva said she saw some progress, noting that Zambia was in the final steps of its agreement with creditors and Ghana was also making progress, as were countries like Sri Lanka that were not covered by the G20 Common Framework.

Other countries that needed restructuring but had not asked for restructuring under the Common Framework, like Malawi, were seeing improved conditions and constructive engagement by China, the world's largest sovereign creditor.

Last year's surge in world interest rates combined with underwhelming post-pandemic economic recoveries and the costs of climate change mean a near record number of countries now spend at least 20% of their government revenues servicing their debt.

A new report released this month by the Boston University Global Development Policy Center warned that 62 developing economies, including most of Africa and Oceania, are already in a full-blown debt crisis or in immediate need of restructuring.

Eric LeCompte, executive director of the Jubilee USA Network, a coalition of religious, development and advocacy groups, said the roundtable needed to deal with key issues such as the failure of private creditors to negotiate debt deals with countries.

© Reuters. IMF Managing Director Kristalina Georgieva speaks during an interview on the day she attends G20 Financial Summit, in Sao Paulo, Brazil, February 27, 2024. REUTERS/Carla Carniel 

"We remain concerned that we are still not solving the debt crises. The slower we see progress, the more difficult it will be to resolve these crises," he said. "The roundtable must urgently define comparable treatment so the public sector stops bailing out the private sector."

Georgieva said she was encouraged that some countries tapping capital markets were finding better conditions, citing the examples of Ivory Coast and Benin.

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