US, China are still committed to global debt efforts, IMF strategy chief says
By Andrea Shalal and Karin Strohecker
WASHINGTON (Reuters) -Top U.S. and Chinese officials will join Wednesday's meeting of the Global Sovereign Debt Roundtable, where a key topic will be the lack of transparency about bank loans that have complicated developing countries' debt restructuring efforts.
International Monetary Fund strategy chief Ceyla Pazarbasioglu said the continued participation of the world's two largest economies in the roundtable, despite a fierce trade war dividing them, showed their commitment to keep addressing the high debt levels hurting developing countries.
Speaking to reporters at the annual meetings of the IMF and the World Bank, Pazarbasioglu said the roundtable created in 2023 had led to progress in shortening the timelines of official debt restructurings and restructuring bonded debt, but there was more work to do on non-bonded debt.
"These discussions have been important to get everyone on the same page,” she said. “The fact that tomorrow we will have the U.S. Treasury Secretary (Scott Bessent) there, China will be there, and others will be there, is a sign that they are still committed to this discussion."
CALL FOR TRANSPARENCY OVER DEBT
Pazarbasioglu said transparency was a shared concern, especially regarding non-bonded debt holdings. “They would like to see more transparency in terms of debt. They fully back this effort of publishing data by the debtors.”
"Non-bonded debt is the laggard at this point," she said, noting that some countries had moved through a debt restructuring process but still faced bank exposures or other exposures that prevented credit rating agencies from removing them from default status and increasing their ratings.
"This is a critical step to make sure that countries are able to access lower cost financing. So that's what we are really focusing on now," she said.
A recent IMF paper detailed the challenges faced by countries such as Ghana, Sri Lanka, Zambia and Suriname, which have gone through debt restructurings, but are still negotiating with loan creditors, delaying upgrades by ratings agencies.
The Group of 20 major economies, which launched the Common Framework for debt restructurings during the COVID pandemic, is also expected to issue a statement on debt issues later this week, activists and officials with G20 countries said.
GLOBAL DEBT AT RECORD LEVELS
Global debt is at record levels, but many emerging markets have actually reduced their debt-to-GDP ratios, although they still face crushing debt service payments and have been crowded out of the capital market by advanced economies.
Content Original Link:
" target="_blank">
