April 14, 2023
World Bank President David Malpass on Thursday said progress on sovereign debt issues would be measured by actual restructuring deals being agreed for Ghana, Ethiopia and Zambia, and said there was still no agreement on his longstanding call for a standstill in debt service payments for countries seeking help.

Speaking a day after the first meeting of a new sovereign debt roundtable, Malpass told Reuters several other issues still needed to be resolved, including China’s previous insistence that multilateral development banks also accept losses as part of debt restructuring deals.

“We’re pushing along on debt,” he said. “Progress in debt restructurings will be measured by actual countries that achieve a restructuring. It’s a case-by-case mechanism.”

He said the target now was to ensure that Ghana, Ethiopia and Zambia, the three countries seeking debt relief under the Group of 20 common framework, moved forward in their separate debt processes.

Global creditors, debtor nations, international financial institutions and private creditors agreed at the roundtable meeting on Wednesday to take steps to jumpstart and streamline long-stalled debt restructuring efforts, including through improved data sharing.

A joint statement by the World Bank, International Monetary Fund and India, current president of the Group of 20 (G20) major economies, did not mention any specific commitments by China, the world’s largest bilateral creditor, to speed the restructuring process.

Reuters reported Beijing was poised to drop its demand that multilateral development banks share in debt restructuring losses, partly in exchange for the IMF and World Bank providing earlier access to their debt sustainability analyses for countries receiving debt treatments.

But the statement only included the institutions’ part of that bargain, to share more information more quickly and for multilateral development banks (MDBs) to quantify “net positive flows” of concessional financing in restructuring cases.

IMF strategy chief Ceyla Pazarbasioglu said China and other participants had acknowledged that there are different ways of contributing to a restructuring, and “the best way for MDBs to contribute … is to provide fresh financing to countries, as much as possible in grant terms.”

Malpass said there were still disagreements within China on the issue, with President Xi Jinping and others downplaying the earlier demand and others – who represent individual creditors – still seeing it as an obstacle.

More work would be done on the issue of comparable treatment of various creditors at a workshop to be held in May, he said. No specific date had been set for the meeting, he said.

China had also raised concerns about how to deal with domestic debt restructuring and how to treat project loans and projects with dedicated revenues, he said.

Private sector creditors who also participated in Wednesday’s meeting had indicated that they would want to participate in debt restructuring deals as part of their fiduciary responsibility, Malpass said, calling that a positive development.

REUTERS exclusive