25 Feb. (EUROPA PRESS) –
The International Monetary Fund (IMF) faces internal disagreements this Saturday in its talks for the restructuring of the international debt during the meeting of the G20 Economy and Finance Ministers in Bangalore, India
“Although there are still some disagreements, we are forming a global sovereign debt round table with the consideration of all public and private creditors,” explained the managing director of the International Monetary Fund, Kristalina Georgieva, on the sidelines of the Group of the 20.
Despite a commitment to find common ground for the benefit of affected countries, particularly developing ones, there is little prospect of tangible progress for now.
“We want to find a process in which everyone can present their concerns and positions on difficult issues,” World Bank President David Malpass explained in statements collected by Bloomberg.
Without a deal among major creditors, there is a risk of prolonging a stalemate that has stalled restructuring programs in countries like Zambia and Sri Lanka.
Saturday’s roundtable between public and private creditors was organized to discuss the shortcomings of the Common Framework, a G20 initiative that brings together the Paris Club — made up of rich countries acting as lenders — to try to restructure the debts of low-income countries on a case-by-case basis.
Rising debt risk in developing countries has been a key issue at the G20 finance chiefs’ meeting in the Indian city.
At the center of the clashes in Zambia and Sri Lanka are Chinese demands that loans made by the World Bank and other multilateral lenders be included in any restructuring. That is partly due to China’s view of these institutions as representatives of American power.
The US and the World Bank have rejected the idea, arguing that any “cuts” would undermine their ability to respond to crises and provide loans on favorable terms.
Under the system agreed upon at the 1944 Bretton Woods conference, the World Bank and IMF traditionally have priority in restructuring as lenders of last resort, depending on their ability to raise low-cost capital for loans at rates below the From the market.
The Secretary General of the United Nations, António Guterres, denounced last week the “extortion” of which the African continent is being victimized at the hands of a global financial system, in need of a “radical transformation”, which prevents African countries from development of their “vital systems”.
Such a thing never happens because “the global financial system denies them debt relief as a rule, or any financing on concessional terms, while charging exorbitant interest,” the secretary-general declared during the opening of the African Union summit that was held in the Ethiopian capital, Addis Ababa.
As a result, “African countries cannot invest in critical areas” such as health, education, green technology, social protection or the creation of new sustainable jobs, and at the same time climb “the development ladder with one hand tied behind the back.”