IMF chief stresses need for new debt process for countries like Sri Lanka

Kristalina Georgieva

• Highlights need for predictable, orderly debt resolution process for countries under Common Framework and those not covered by it
• Stresses need to enhance dialogue and collaboration on debt issues
• Says will further build on this discussion during the World Bank-IMF Spring Meetings in April
• As debt vulnerabilities mount in several countries, endorses efforts to strengthen global debt architecture

The International Monetary Fund (IMF) has stressed the need for a more predictable, timely, and orderly process for both countries under the Common Framework (CF) and those not covered by it, such as Sri Lanka, so that the debt restructuring efforts can be completed.

At the first meeting of G20 Finance Ministers and Central Bank Governors in Bengaluru, India that took place on Saturday (25), IMF Managing Director Kristalina Georgieva said it is essential for the G20 members to strengthen debt architecture as it did back in 2020 by the Common Framework (CF) for debt resolution.

“…more predictable, timely, and orderly processes are needed both for countries under the CF and for those not covered by it, including Sri Lanka and Suriname,” said Georgieva addressing the event.
“This means that we must enhance dialogue and collaboration on debt issues. This is the goal of the new Global Sovereign Debt Roundtable (GSDR): to bring together creditors—official, old and new, and private—and debtor countries to discuss key issues that can facilitate the debt resolution process,” she added.

The IMF launched the GSDR under the auspices of India’s G20 presidency last week at the deputies’ level, followed by an engaged and constructive principals meeting that was held early Saturday. 
“We will further build on this discussion during the World Bank-IMF Spring Meetings in April,” she added.
In light of rising debt vulnerabilities in many countries, Georgieva said she strongly endorses efforts to strengthen the debt architecture and improve the speed and effectiveness of debt resolution.

Sovereign debt vulnerabilities, already elevated before the pandemic, have been exacerbated by the shocks stemming from Covid-19 and Russia’s war against Ukraine. This is particularly the case for developing and low-income countries with very limited policy space and huge development needs, she highlighted.

At the center of the Global Financial Safety Net, Georgieva said the IMF has been scaling up lending as its members confront significant economic challenges that the past few years have brought.
Through the standard lending facilities and emergency financing, the IMF has approved US$ 272 billion of financing to 94 countries since the beginning of the pandemic, of which 57 are low-income countries.

epeated turbulence, Georgieva stressed it is critical to further bolster the IMF’s capacity to support its members. 
“This applies most urgently to our concessional financing for low-income countries through our Poverty Reduction and Growth Facility (PRGT). Demand for PRGT support has reached unprecedented levels and can only be met if matched by an increase in PRGT loan and subsidy resources,” she said.

In addition, a successful quota review—which the IMF’s membership has committed to complete by December 2023—is critical for a strong Global Financial Safety Net. The latter has always been important for global stability and is even more important in today’s challenging global environment, especially for the most vulnerable countries and people, she added. 
“Our common interest is to secure a well-functioning and integrated global economy, for the sake of a more secure and prosperous world,” noted the IMF chief.