World Bank calls for reforms to expedite debt restructuring

World Bank calls for reforms to expedite debt restructuring

The World Bank will advocate for a solution to the rising debt problems of impoverished countries and, jointly with the International Monetary Fund, will present concrete proposals for deciphering some of the most significant impediments to restructuring at this week’s spring meetings.

The President of the World Bank, David Malpass, stated in his blog that they would share these new ideas at the Round Table on Global Sovereign Debt, a meeting conducted by the “Bretton Woods institutions” (SB and IMF) and India, who chairs the Group of 20 in Washington.

Malpas suggested sharing a joint World Bank-IMF debt sustainability analysis for countries with all creditors involved in discussions simultaneously, with improved transparency and information sharing to help estimate the size of debt relief needs.

As the biggest sovereign creditor of developing countries, China has raised questions about those institutions’ assumptions, slowing the process. 

Reaching an agreement

According to Malpas, restructuring would also be revved and supported by forming clear timelines for steps, including forming a creditor committee, providing financial contracts, and signing actual restructuring arrangements.

He commented that suspending debt payments at the start of the process would also supply incentives to achieve a deal and protect the capacity to repay the debt.

As for individual country cases, Malpas said Zambia’s official creditor committee, conducted by China and France, intends to meet in the week beginning April 16, and he is looking for a “good outcome.” Regarding Ghana, he expressed that improving the technical meetings was a positive sign and stressed the need for quicker progress in Ethiopia.