On Friday, International Monetary Fund director Kristalina Georgieva said debtors and creditors made “tangible progress” on debt restructuring difficulties this week. Still, she advised nations with increasing debt to seek help early.
Georgieva told a press conference during the IMF and World Bank spring meetings in Washington that a new sovereign debt forum was speeding up debt restructuring. This week, participants agreed that multilateral development banks could provide positive net flows to impoverished nations.
She advised governments facing financial difficulty and creditors to consider reprofiling debt levels before restructuring.
“I very much hope that we will take, proactively, steps to prevent the need (for) restructuring by reprofiling debt early, by providing financial support to countries so they can step up economic activities… and avoid a more massive debt restructuring process,” Georgieva said.
We must prepare for worldwide deterioration. “Imagine tighter financial conditions that increase these countries’ burden,” she said. “Please, let’s act before the situation becomes dire.”
Georgieva said the IMF would keep working with 20 African nations with high debt loads to avert restructurings.
Spanish Economy Minister Nadia Calvino, who leads the International Monetary and Financial Body (IMFC), the IMF’s steering body, said debt discussions were “particularly productive” this week.
Creditors and borrowing governments, private-sector actors, and international financial institutions will meet again mid-May to address how creditors are treated in restructuring cases.
China, the world’s largest sovereign creditor, won’t absorb loan losses until private-sector creditors and multilateral development banks do.
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