China, the main creditor country of the poor countries, promised to work “constructively” in the restructuring of its debt, it said on Thursday. Kristalina Georgiev, managing director of the IMF.
“We got a very concrete commitment from China to join the committee on Zambia and more generally to work constructively within the G20 common framework,” he told a news conference.
At the start of the Covid-19 pandemic, rich G20 countries offered poor countries a moratorium on debt service payments until the end of the year before extending it until the end of 2021.
Parallel to this initiative, they had created, in November 2020, a “common framework” aimed at restructuring, or even canceling, the debt of the countries that requested it.
However, for now the private creditorsespecially the Chinese, are holding back its implementation.
“There was a unanimous commitment to reinforce the common framework to make it operational and try to have a concrete and clear timetable, thanks to the strong commitment of some key players” such as China, stressed Nadia Calvino, president of the Monetary and Financial Committee (CMFI). ).
“We have worked hard so that all the creditors sit down at the table, the creditors of the paris club (…), official creditors like China, Saudi Arabia, India, United Arab Emirates and private sector creditors,” Georgieva said.
The implementation of this common framework is stalled because “there is no clearly established procedure or timetable”.
“There is no incentive for countries to step in and request” debt restructuring in this framework, he continued.
However, he stressed that abandoning this framework was not a solution because there is no alternative to mobilize countries in debt relief for low-income countries.
At the moment, only three African countries, Chad, Zambia and Ethiopiahave applied to benefit from this framework.