WASHINGTON, Nov 13 (BNC Network) - Stating that the world is not yet out of the woods, IMF Managing Director Kristalina Georgieva has cautioned that the pandemic crisis is not over.
“We need further support through debt relief and through fresh financing,” said addressing Extraordinary G20 Finance Ministers and Central Bank Governors Meeting today.
The Debt Service Suspension Initiative (DSSI) has provided much needed "breathing space" to countries, she said and pointed out for some of those that are facing temporary difficulties to service their debt, this breathing space is enough.
But there are countries where debt levels are not sustainable. And this suspension time ought to be used to bring them to a sustainable level. This is where the timely Common Framework comes into play--a coordinated approach to debt treatment, a standardized approach, but with case-by-case resolution, Kristalina said.
It is also so critically important, as many have said, to bring the private sector on board. Having the Common Framework would make this more likely, and applying it on a case-by-case basis will increase the viability of our action.
“When we have faster resolution, countries are more likely to come forward earlier rather than later. By doing so, the cost both on creditors and on debtors would be lower,” the IMF MD said.
“My third point is to support those who said this is a very important step on the road to improving international debt architecture,” she said.
“Indeed, there is more work to be done. There are other countries outside the DSSI that could face unsustainable debts. So how we use the Common Framework to further improve the international debt architecture is essential,” she observed.
In April, the World Bank’s Development Committee and the G20 Finance Ministers endorsed the Debt Service Suspension Initiative (DSSI) in response to a call by the World Bank and the IMF to grant debt-service suspension to the poorest countries to help them manage the severe impact of the COVID-19 pandemic. Debt-service suspension with broad and equitable participation is urgently needed to allow low-income countries to concentrate their resources on fighting the pandemic. The G20 called on private creditors to participate in the initiative on comparable terms.
The IMF boss was all praise for the Paris Club for its contributions and bringing Paris Club and non-Paris Club creditors together.
The Paris Club is a group of officials from major creditor countries whose role is to find co-ordinated and sustainable solutions to the payment difficulties experienced by debtor countries.