Creditors from the G20 nations should accelerate debt restructurings in order to avoid economic collapse in some countries, International Monetary Fund (IMF) Managing Director Kristalina Georgieva and IMF Director of the Strategy, Policy and Review Department Ceyla Pazarbasioglu said on Thursday
WASHINGTON (Pakistan Point News / Sputnik - 02nd December, 2021) Creditors from the G20 nations should accelerate debt restructurings in order to avoid economic collapse in some countries, International Monetary Fund (IMF) Managing Director Kristalina Georgieva and IMF Director of the Strategy, Policy and Review Department Ceyla Pazarbasioglu said on Thursday.
"We may see economic collapse in some countries unless G20 creditors agree to accelerate debt restructurings and suspend debt service while the restructurings are being negotiated. It is also critical that private sector creditors implement debt relief on comparable terms," Georgieva and Pazarbasioglu said in a blog post.
The two IMF officials urged the G20 nations to step up a common framework for debt treatments.
"Despite significant relief measures brought on by the COVID-19 crisis, about 60 percent of low-income countries are at high risk or already in debt distress," they said.
In 2015, that number was less than 30 percent, Georgieva and Pazarbasioglu said.
Recent experiences of Chad, Ethiopia, and Zambia show that the Common Framework for debt treatments must be improved, they noted, calling on the G20 nations to make a "quick action" to build confidence in the framework.
The IMF officials warned that 2022 will be much more challenging with regard to the tightening of international financial conditions seen on the horizon.
"Countries will need to transition to strong programs, and for low-income countries that need comprehensive debt treatment, the Common Framework will be critical to unlock IMF financing," they said.
However, Georgieva and Pazarbasioglu warned, the implementation of essential measures remain slow. Chad, Ethiopia, and Zambia already have made requests for debt relief under the Common Framework, but faced significant delays, they added. In part those problems are caused by coordination issues between Paris Club and other creditors, multiple government institutions and agencies within creditor countries, which can slow down decisions.
At the same time, all three countries should solve their domestic challenges, which slows the progress, Georgieva and Pazarbasioglu said.
They urged the international community to take urgent steps to improve the situation. IMF is ready to work with all partners to help ensure the framework delivers for the people it was put in place to help.
