G20 pushes to revamp slow debt-relief framework as borrowing costs surge
Ensuring equal treatment for all creditors has been a big part of why the process has been so slow and prone to setback
[WASHINGTON] Support is growing for enhancements to the Group of 20’s coordinated debt-relief initiative, faulted for being too slow and unwieldy since its inception in 2020.
Finance leaders meeting in Washington for a review of the G20’s Common Framework said debt vulnerabilities remain high, and that even when nations can meet their obligations, the soaring cost of borrowing is crowding out spending on basic services.
To smooth future restructurings, the gathering discussed improving information sharing among different creditor groups to bring everyone onto the same page more quickly. That’s according to a joint progress report from International Monetary Fund managing director Kristalina Georgieva, World Bank president Ajay Banga and South African Finance Minister Enoch Godongwana, whose country currently holds the G20 presidency, as co-chairs of the Global Sovereign Debt Roundtable.
There was “broad support for, but not yet full consensus on, an earlier and more comprehensive publication by official creditor committees of the key terms of the restructuring,” they said. “This would significantly facilitate the implementation of comparability of treatment across creditors.”
Ensuring equal treatment for all creditors, including official government lenders, commercial banks and eurobond holders, has been a big part of why the process has been so slow and prone to setback.
While Ghana and Zambia have fought their way through the framework after defaulting in the wake of the Covid-19 pandemic, other nations are still struggling.
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Ethiopia said on Tuesday (Oct 14) that talks with holders of its defaulted US$1 billion bond collapsed after the parties failed to agree on restructuring terms, citing its strong commitment to the comparability-of-treatment principle.
The co-chairs also saw broad support for giving all G20 creditors access to the World Bank’s debt data-sharing tools, ensuring that debtors and creditors reconcile their records, and offering technical advice on debt management to help countries avoid future problems. BLOOMBERG
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