Overborrowing and poor debt management, and the Covid pandemic, have tipped many developing economies over the edge. Some are either in default or at risk of debt default – Sri Lanka is the latest example. Others, like Zambia and Chad, have achieved sufficient agreement on debt restructuring to unlock IMF programs and so improve short-term external liquidity. Even so, private creditor support for debt treatment is still necessary if these countries are to emerge from their current state of default.

Rising inflation and the shift in monetary policy by the main central banks will further increase debt-servicing costs. Therefore, a common approach is needed to identify the problem and possible ways to tackle it to reconcile the need of low-income countries in debt with the governance – and the imperative of avoiding moral hazard – of bilateral lending. This roundtable will follow the discussion that the Friedrich-Ebert-Stifung and the Center for Global Development started during the IMF Spring Meetings in 2022.

Questions to be raised in this roundtable discussion include: 

How do we assess the rise of bilateral lending and its geographical distribution?

Is the Zambia agreement a game changer? Will it alter the assessment for other countries?

How can we enhance the sharing of detailed sovereign debt information, with provisions for the confidentiality of commercially sensitive information?

Could a provision allowing any sovereign debtor to request an updated debt sustainability analysis (DSA) from the IMF, as a basis for negotiations with its public and private creditors, enhance transparency?

How can G-10 countries assist in securing the necessary financing assurances to regain debt sustainability?

Is the role of bilateral lenders to assist their peers, even if at a cost?

Is it possible to establish principles and benchmarks that can speed the process in future applications under the Common Framework?

Has bilateral creditors’ preference to offer relief for large loans through deferrals rather than write-downs been an obstacle to outcomes that can deliver debt sustainability?

What are the policy lessons that must be taken on board to manage debt and prevent overborrowing?

After two years of pandemic disruption, RBWC is back in Washington DC for the IMF and World Bank annual meetings.

In 2022 the world seems brand new. We are likely entering a new era of stagflation, associating high-energy prices, low growth perspectives, high public debt levels and tightening monetary conditions. While differing very much in nature, these crises will all have a decisive effect on economic and monetary policy. In particular, sustained geopolitical and economic fragmentation could be extremely disruptive.

Nevertheless, optimism need not disappear: these last two years have also been crucial for the development of digital finance. These new technologies can be key to the next generation of monetary and financial systems – Notwithstanding they raise many challenges that need to be carefully understood.

This high-level one-day seminar seeks to develop a deeper understanding of how all of these transformational developments are likely to impact the international order.