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“Lanka needs new debt resolution process”

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Countries like Sri Lanka and Suriname which are not covered by existing frameworks need a new debt resolution process, said International Monetary Fund Managing Director Kristalina Georgieva (PICTURED) at the first meeting of the G20 Finance Ministers and Central Bank Governors in Bengaluru, India.

“This framework should be more predictable, timely, and should be one with an orderly process,” she said.

With global growth set to slow in 2023 and remain below its historical average, too many people in too many countries are struggling to make ends meet.

“The international community, therefore, has a responsibility to come together to find solutions for the most vulnerable members of our global family. This calls for urgent action to strengthen the international financial architecture, especially in the area of debt resolution and strengthening the global financial safety net.”

In light of rising debt vulnerabilities in many countries, I strongly endorse 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.

In a world of great uncertainty and repeated turbulence, 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.”

It is now critical to complete Zambia’s debt restructuring, establish a Creditor Committee for Ghana, and advance work with Ethiopia.

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. Our common interest is to secure a well-functioning and integrated global economy, for the sake of a more secure and prosperous world.”

“It is therefore imperative for the G20 to strengthen the debt architecture. The G20 did so in 2020 with the Debt Service Suspension Initiative (DSSI) and by establishing the Common Framework (CF) for debt resolution.”

Commenting on India she said,” India is a relative bright spot and an important engine of growth for the world economy, representing about 15% of global growth in 2023.”

“Through our standard lending facilities and emergency financing, the IMF has approved $272 billion of financing to 94 countries since the beginning of the pandemic, of which 57 are low-income countries.”



Monday, February 27, 2023 – 01:00

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