Poor nations face peril over elusive G-20 debt relief push

A failure to secure meaningful progress on a debt relief for the poorest countries of the world at the International Monetary Fund (IMF) and World Bank annual meeting in Washington has left policymakers_ campaigners and investors frustrated.

Two years ago the Group of 20 (G20) launched the Common Framework - a mechanism designed to provide a swift and comprehensive debt overhaul to nations buckling under debt burdens after coronavirus shock that would reach beyond temporary debt payment moratoriums.

But results have proven elusive_ hampered by a combination of a lack of progress in bringing key creditors around the table and getting them to commit to joint action_ and establishing debt parametres that form the basis of talks as well as political upheaval in some of the countries.

The world's poorest countries face $35bn in debt-service payments to official and private-sector creditors this year_ more than 40 per cent of that is due to China_ the World Bank found.

"Time is not our friend_ interest rates are up_ the dollar has appreciated and the debt burden has become heavier_" IMF chief Kristalina Georgieva told a conference in London after the Washington gathering ended mid-October.

Debt restructurings can be protracted_ getting a multitude of parties to agree on a shared process is no mean feat. But doubts are rife with progress having been glacial.

"It isn't a perfect instrument. I take responsibility for that as being one of the negotiators_" Guillaume Chabert_ IMF deputy strategy chief who helped design the Common Framework during his time at the Paris Club_ told a panel in Washington.

"We need a fast_ quick_ orderly_ reliable_ predictable mechanism. The Common Framework is a good start_ but you need some fixes."

To Zambia_ Africa's first COVID-era default in 2020_ it was still unclear who will lead talks for renegotiating its nearly $6 billion debt with China.

Ethiopia's debt restructuring has ground to a halt with the country engulfed in a civil war.

Official creditors found that Chad_ the first to request Common Framework treatment in January 2021_ might not need debt relief after all thanks to the oil price surge_ though they signalled readiness to reconvene if needed.