Sovereign debt vulnerabilities, already elevated earlier than the pandemic, have been exacerbated by the shocks stemming from COVID-19 and Russia’s struggle towards Ukraine, and the worldwide group should now come collectively to discover options for essentially the most weak members of the global household, International Monetary Fund (IMF) Managing Director Kristalina Georgieva mentioned on Saturday.
“This calls for urgent action to strengthen the international financial architecture, especially in the area of debt resolution and strengthening the global financial safety net,” Ms. Georgieva mentioned at a gathering of the G20 Finance Ministers and Central Bank Governors. This was notably the case for creating and low-income international locations with very restricted coverage area and big growth wants, she identified.
The IMF chief’s feedback on the G20 assembly beneath India’s presidency come within the backdrop of the South Asian nations of Sri Lanka, Bangladesh and Pakistan searching for pressing funds from the multilateral lender amid acute financial stress.
China, the world’s largest bilateral creditor, urged the group of massive economies to conduct a good, goal and in-depth evaluation of the causes of global debt points as clamour grows for lenders to take a big haircut, or settle for losses, on loans, Reuters reported.
With global progress set to sluggish in 2023 and stay beneath its historic common, too many individuals in too many international locations have been struggling to make ends meet, the IMF chief cautioned.
“In light of rising debt vulnerabilities in many countries, I strongly endorse efforts to strengthen the debt architecture and improve the speed and effectiveness of debt resolution,” she added.
Observing that the IMF had accepted $272 billion to 94 international locations because the starting of the pandemic, of which 57 have been low-income international locations, Ms. Georgieva mentioned, the Fund as a part of the Global Financial Safety Net, had been scaling up lending as members confronted the numerous financial challenges that the previous few years had introduced.
The IMF had additionally stepped up its efforts to assist deal with the global meals disaster and a number of other international locations, together with Malawi, Guinea, and Haiti, had benefited from its new Food Shock Window, she famous.
“In a world of great uncertainty and repeated turbulence, it is critical to further bolster the IMF’s capacity to support its members. Our common interest is to secure a well-functioning and integrated global economy,” she added.
