Under the Group of Twenty (G20) Common Framework, the International Monetary Fund (IMF) and World Bank are collaborating to speed debt restructuring for Ghana and other countries.
This was said by Ms Kristalina Georgieva, Managing Director of the IMF, during a plenary discussion at the 2023 IMF/WGB Annual Meetings in Marrakech.
"The IMF and the World Bank are bringing together all relevant creditors and debtors with promising signs," the IMF Managing Director remarked.
She added that the two global financial institutions were acting because the Common Framework's progress on debt restructurings had been slow. The move is one of the supporting pillars of the Marrakech Principles' two-thronged "no regrets" initiatives for the next fifty years, which aim to close the diverging global income gap and produce job-rich growth for all.
Investment in strong economic foundations and investment in global collaboration are the two policy activities.
More than half of low-income nations were still in or on the verge of economic crisis, with around half of emerging economies facing default-like debt spreads. This, according to Ms Georgieva, necessitated the quick delivery of debt treatment, which would benefit both creditors and debtors.
She stated that the Fund had supplied approximately US$1 trillion in liquidity and finance to governments throughout the world since the, in addition to pushing for expedited debt negotiations.
"This came via the US$650bn Special Drawing Right (SDR) and US$320bn in lending to 96 countries, including 56 low-income nations," she went on to say.
"Our meetings here in Marrakech, the Red, leave me in no doubt that, together, we will unlock the door to opportunities for the next generation," the head of the International Monetary Fund stated.
"Debt has risen across emerging markets, more than doubling in Africa, shackling growth."
Mr. Banga, the World Bank President, observed that countries are being pushed to the ground just as they are attempting to rise.
He stated that it was critical to reinvent relationships and develop innovative solutions to overcome debt and other economic and climate change concerns for a sustainable planet.
"We took our first steps on this journey in April, squeezing US$40bn over 10 years from our balance sheet by adjusting our loan to equity ratio," said Jeffrey Sachs, president of the World Bank.
He went on to say that the bank has also developed a portfolio guarantee mechanism and launched a hybrid capital instrument to allow it to accept risks while increasing its lending capacity.
"Taken together, we could provide US$157bn more in lending over a decade," said Mr. Banga.
Following the COVID-19 epidemic, immediate actions were taken to reduce the debt load of low-income nations, with countries urging the IMF and World Bank to endorse the Debt Service Suspension Initiative (DSSI).
This followed an agreement by G20 Finance Ministers and Central Bank Governors to support the suspension of debt service for the Group's most vulnerable countries.
Later in 2020, the G20 Finance Ministers took additional steps by supporting the Common Framework for Debt Treatment Beyond the DSSI in order to facilitate prompt and orderly debt treatment for DSSI-eligible nations.
Ghana, Chad, Ethiopia, and Zambia have all requested debt restructuring and are in various stages of negotiations with Official Creditors.
Ghana, for example, anticipates finalizing a settlement with external creditors for a second tranche of US$600 million from the IMF, while Zambia struck an agreement on Saturday, October 14, 2023, and is awaiting official signature.
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