International Monetary Fund (IMF) chief Kristalina Georgieva says it is essential to speed up amendments to the G20 Common Framework on debt restructuring and open the process to middle-income countries like Sri Lanka.
According to Reuters, Georgieva told the Reuters NEXT conference in New York that changes to the G20 Common Framework on debt restructuring were needed to speed up debt treatments, freeze debt service payments once a country requested help, and open the process to middle-income countries like Sri Lanka.
“We are concerned that there is a risk for confidence in debt resolution to be eroded at a time when the level of debt is very high,” she said.
“We don’t see at this point … a risk of a systemic debt crisis,” she said, adding that countries in debt distress were not large enough to trigger a crisis that would threaten financial stability.
Meanwhile, World Bank President David Malpass said on Thursday that the world’s poorest countries now owe $62 billion in annual debt service to official bilateral creditors.
Stating that this is an increase of 35% over the past year, Malpass warned that the increased burden is increasing the risk of defaults.
Malpass told the Reuters NEXT conference in New York that two-thirds of this debt burden is now owed to China, providing some details of the development lender’s annual debt statistics report due next week.
“I’m worried about a disorderly default process where there’s not a system to really address” debts for poorer countries, Malpass said.
Malpass further said that he would join a meeting in China next week with heads of other international institutions and Chinese authorities to discuss the country’s approach to debt relief for poorer countries, COVID-19 policies, property sector turmoil, and other economic issues.
“China’s one of the big creditors, so…it’s very important that China engage on this issue and think about where it sees the world going and be responsive to work with what needs to be done to achieve sustainability for the countries,” he said. (NewsWire)