Global Sovereign Debt Roundtable Agrees On Improving Info Sharing On Debt Restructuring

Amid rising debt vulnerability being faced by low and middle-income countries, the Global Sovereign Debt Roundtable (GSDR) has agreed on urgently improving information sharing, including on macroeconomic projections and sustainability assessments, at an early stage of the debt restructuring processes.

Co-chaired by the International Monetary Fund Managing Director Kristalina Georgieva, World Bank Group President David Malpass and Union Finance Minister Nirmala Sitharaman, the GSDR on Wednesday discussed debt sustainability, and debt restructuring challenges and ways to address them. As a priority for India's G20 Presidency, she said there is a need to augment present global efforts, including those of the G20, to address growing debt distress across the globe.

During the first G20 Finance Ministers and Central Bank Governors (FMCBG) meeting in February, the urgency to address debt vulnerabilities in low and middle-income countries including Sri Lanka was recognized. Sitharaman stressed on debt transparency, information-sharing and clarity on the comparability of treatment, predictability and timeliness of the debt restructuring process, including those for steps involved in the process and ways to assess and enforce.

Discussions focused on the actions that can be taken now to accelerate debt restructuring processes and make them more efficient, including under the G20 Common Framework, according to a statement issued by the roundtable. "We agreed on the importance to urgently improve information sharing including on macroeconomic projections and debt sustainability assessments at an early stage of the process. The IMF and World Bank will rapidly issue staff guidance on information sharing at each stage of the restructuring process," it said.

"The meeting discussed the role of Multilateral Development Banks (MDBs) in these processes through the provision of net positive flows of concessional finance. The International Development Association's (IDA) provision of positive net flows and the ex-ante implicit debt relief through increased concessionality and grants to countries facing higher risks of debt distress was welcomed," the statement said.

To clarify key concepts to support predictability and fairness of debt restructuring processes, a workshop will be organised in the coming weeks on how to assess and enforce comparability of treatment, it said."Moreover, further work will be undertaken on principles regarding cut-off dates, formal debt service suspension at the beginning of the process, treatment of arrears, and perimeter of debt to be restructured, including with regard to domestic debt," the statement said.

This work will also help in clarifying potential timetables to accelerate debt restructurings, it said. During the first FMCBG meeting, the member nations discussed efficient and quick resolutions. The G20 Chair's Summary and Outcome Document of First G20 FMCBG observed that Zambia had waited for more than a year-and-a-half and there have been countries that went back on the request because they waited for two years.

Finance Ministers of G20 grouping welcomed the conclusion of debt treatment for Chad and called for a swift conclusion of the work on debt treatment for Zambia and Ethiopia. It expected rapid formation of the official creditor committee for Ghana to work on the requested debt treatment and a swift resolution to Sri Lanka’s debt situation. "We task the International Financial Architecture Working Group to develop a G20 Note on the Global Debt Landscape in a fair and comprehensive manner. We welcome joint efforts by all stakeholders, including private creditors, to continue working towards enhancing debt transparency and look forward to the results of the voluntary stocktaking exercise of data sharing with IFIs," it had said.

In December last year, World Bank President David Malpass said the world's poorest countries owed $62 billion in annual debt service, a 35 per cent growth over $46 billion in 2021, triggering a higher risk of defaults. Malpass also said low-income countries are at high risk of debt distress or are already in it and debt crises are also spreading to middle-income countries.

Under the G20 Presidency, India has been pressing for ways to tackle the aggravated debt vulnerabilities facing developing nations mainly on account of the continuing geopolitical tensions and the pandemic. It is feared that if left unaddressed, the mounting debt vulnerabilities of developing nations could trigger global recession and push millions to extreme poverty.