IMF’s Georgieva warns of ‘complacency’ over global debt problems

0

July 10 (Reuters) – IMF Managing Director Kristalina Georgieva is pushing China and other Group of 20 economies to accelerate debt relief for a growing number of heavily indebted countries, warning that not doing so doing so could trigger a damaging “downward spiral”.

Georgieva told Reuters it was crucial to relaunch the largely stalled common framework for dealing with debt that was adopted by the G20 and the Paris Club of official creditors in October 2020, but has so far failed. not provide a single result.

“This is a subject on which we cannot rest on our laurels,” she said. “If confidence is eroded to the point where there’s a downward spiral, you don’t know where it would end,” the head of the International Monetary Fund said in an interview late last week ahead of this meeting. finance managers week in Indonesia. .

Join now for FREE unlimited access to Reuters.com

Register

Georgieva said she spoke with Indonesian President Joko Widodo, who holds the rotating G20 presidency this year, at the Group of Seven meeting last month in Germany and urged him to press for a greater unity on debt ahead of the G20 leaders’ summit in November.

“G20 leaders don’t want to be in a situation where this issue dominates the conversation just because we’re not making progress,” Georgieva said.

Western officials are mounting criticism of the G20 Common Framework process after nearly two years of glacial progress largely blamed on procrastination by China, the world’s largest sovereign creditor, and private sector creditors.

Georgieva said almost a third of emerging countries and twice that proportion of low-income countries were over-indebted, with the situation worsening as advanced economies raised interest rates.

Capital outflows from emerging markets were continuing and almost one in three such countries now had interest rates of 10% or more, Georgieva said, noting that more middle-income countries, including Sri Lanka and Malawi, were asking for help from the fund, along with others. likely to follow.

“The pressure on us to move is very strong,” she said, noting that the war in Ukraine has exacerbated crises in emerging markets and developing economies from the pandemic.

Georgieva said it was imperative to agree on debt relief for Zambia, Chad and Ethiopia, three African countries that have requested aid under the Common Framework and whose committees of creditors meet this month. Read more

She urged China to better coordinate its multiple lenders, warning that Beijing would be the “first to lose dramatically” if the current debt problems turned into a full-blown crisis.

Georgieva said she was encouraged that China had agreed to co-chair Zambia’s creditors’ committee.

“My message to everyone is, let’s stop pointing fingers,” she said. “There is a job to do.”

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Andrea Shalal; Editing by Sam Holmes

Our standards: The Thomson Reuters Trust Principles.

Share.

Comments are closed.