The Intergovernmental Group of Twenty-Four (G-24) have urged more substantial financial buffers from global development actors to enable Ghana and other developing countries to speedily meet their debt needs.
Ghana, Sri Lanka, Zambia, Suriname, Belize, Zambia, and Ecuador are among the debt-distressed developing nations whose external debt increased to $2.9 trillion in 2021, World Bank International Debt Statistics figures indicate.
Already, Ghana, Côte d’Ivoire, Zambia, and Egypt, all with heightened economic distress, are restructuring their debts to access various loan support programmes with the International Monetary Fund (IMF).
The IMF has indicated that debt challenges in those low-income countries are far from where they were in the 1990s before the Heavily Indebted Poor Countries (HIPC) initiative, both in terms of debt levels and accumulation of arrears.
The Fund said about 60 per cent of the 73 low-income countries now eligible for the G20 Common Framework for Debt Treatments are at considerable risk or already in debt distress, compared to less than 30 per cent in 2015.
The United Nations also estimates that over 50 countries, which account for more than half of the world’s poorest people, need immediate relief to avoid even more extreme poverty.
Analysts estimate that as much as $400 billion in international market debt could be at the heart of the problems.
Adama Coulibaly, Minister of Economy and Finance, Cote d’Ivoire and Chair, G-24, said the was a need for urgent global action to support developing countries to manage their debt vulnerabilities.
He made the call during a press conference at the ongoing IMF-WBG 2023 Spring Meetings in Washington DC, U.S.
Coulibaly said the current economic risks required more support to expand global liquidity to cushion vulnerable countries, while supporting their debt operations.
“A global financial stability requires a well-resourced, quota-based IMF at the centre of the global financial safety net, playing the role of an international lender of last resort,” he stated.
Coulibaly noted that such support would enable country authorities to broaden their range of policy options to tackle ongoing economic and social challenges.
He called for the strengthening of the implementation of the G20 Common Framework to deliver timely, orderly, and coordinated debt restructuring for countries through fair burden sharing, increased participation of private creditors and comparability of treatment among private and official bilateral creditors.
“Strengthening multilateral coordination by official, bilateral and private creditors is needed to address the deteriorating debt situation and facilitate coordinated debt treatment for debt-distressed low-income countries and middle-income countries,” he said.
The G-24 Chairperson encouraged the engagement of debtors and creditors through the Global Sovereign Debt Roundtable to foster collective understanding of all debt issues, noting that coordination with creditors would ensure preemptive and orderly restructurings of debt.
Many debt-vulnerable countries, he noted, had substantial domestic creditors, and debt resolution mechanisms, which if not intelligently designed, could create domestic financial market instability.
He called on the IMF and WBG to stand ready to support the financial sectors of those countries as they went through restructuring and to ensure adequate liquidity for their banks.
The ongoing week-long spring meetings of the IMF and WBG in Washington DC, US, presents a unique opportunity for a global conversation on the world economic outlook, poverty eradication, economic development, and aid effectiveness.
It is being attended by central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organisations and academics.
The spring meetings feature seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world’s financial system.
