IMF MD urges G20 leadership to strengthen International Financial Architecture, support debt recast of vulnerable nations

IMF managing director Kristalina Georgieva urged the G20 Leadership to Strengthen the International Financial Architecture and come to the aid of the most vulnerable nations burdened by debt.

In a statement released towards the end of the four day-long meeting of the G20 countries in Bengaluru this week, the IMF chief said with global growth set to slow in 2023 and remain below its historical average, “too many people in too many countries are struggling to make ends meet... The international community, therefore, has a responsibility to come together to find solutions for the most vulnerable members of our global family.”

Calling for urgent action to strengthen the international financial architecture, especially in the area of debt resolution and strengthening the global financial safety net, Georgieva said, “I strongly endorse efforts to strengthen the debt architecture and improve the speed and effectiveness of debt resolution."

"Sovereign debt vulnerabilities, already elevated before the pandemic, have been exacerbated by the shocks stemming from Covid-19 and Russia’s war against Ukraine. This is particularly the case for developing and low-income countries with very limited policy space and huge development needs.

It is therefore imperative for the G20 to strengthen the debt architecture,” she added.

“It is now critical to complete Zambia’s debt restructuring, establish a Creditor Committee for Ghana, and advance work with Ethiopia.

Nonetheless, more predictable, timely, and orderly processes are needed both for countries under the CF and for those not covered by it, including Sri Lanka and Suriname,” she said.

Urging counties to enhance dialogue and collaboration on debt issues, Georgieva said this was the goal of the new Global Sovereign Debt Roundtable (GSDR): to bring together creditors—official, old and new, and private—and debtor countries to discuss key issues that can facilitate the debt resolution process.

The IMF chief reiterated that India remained a bright spot in an otherwise uncertain global macro environment.

“India is a relative bright spot and an important engine of growth for the world economy, representing about 15 percent of global growth in 2023. India’s remarkable progress on Digital Public Infrastructure provides a strong basis to secure robust and inclusive growth over the medium term,” Georgieva said.

“In our role at the center of the Global Financial Safety Net, the IMF has been scaling up lending as our members confront the significant economic challenges that the past few years have brought,” she said.

“Through our standard lending facilities and emergency financing, the IMF has approved $272 billions of financing to 94 countries since the beginning of the pandemic, of which 57 are low-income countries. We have also stepped up our efforts to help tackle the global food crisis. Several countries have benefited from the IMF’s new Food Shock Window, including Malawi, Guinea, and Haiti, and more are expected to do so,” the IMF chief added.