Restructuring Debt of Poorer Nations Requires More Efficient Coordination

Reducing poverty and improving equity
Posted Apr 09, 2022 | IMF, Guillaume Chabert, Martin Cerisola, Dalia Hakura

Spurred by low interest rates, high investment needs, limited progress raising additional domestic revenue, and stretched systems for managing public finances, the debt ratios of Debt Service Suspension Initiative (DSSI) countries have increased, partly reversing a decline seen in the early 2000s. Guillaume ChabertMartin Cerisola, and Dalia Hakura suggest in their IMF blog that putting in place mechanisms that ensure coordination and confidence among creditors and debtors has become urgent. Improvements to the G20 Common Framework could play an important role by ensuring broad participation of creditors, and fairer burden sharing. Strengthening debt management and debt transparency should be priorities as this will help countries manage debt risks, reduce the need for debt restructurings, and facilitate more efficient and durable resolution if debt becomes unsustainable.


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