Home Business framework Faster debt relief needed as more countries seek help, says IMF’s Gopinath

Faster debt relief needed as more countries seek help, says IMF’s Gopinath


More countries are likely to seek debt relief because a stronger dollar makes repayments more difficult, and the agenda rich countries have to help poorer ones needs to be faster and broader, the deputy chief said. of the International Monetary Fund.

About 60% of low-income countries are at high risk or already in debt distress, and about 20 emerging markets have debt trading at distressed levels, First Deputy Managing Director Gita Gopinath said in an interview with Michael McKee on Bloomberg Television on Friday. .

“We will probably see more countries in need of debt relief,” she said.

The surge in prices triggered a series of interest rate hikes around the world by central banks, led by the aggressive actions of the Federal Reserve, which inflated the dollar. Meanwhile, developing countries have amassed a quarter of a trillion dollars in troubled debt that threatens to create a historic cascade of defaults.

“The depreciation of emerging market currencies against the dollar has inflationary consequences,” Gopinath said. “It makes monetary policy for them much more difficult at the moment and there are countries that have borrowed in dollars, it makes it difficult for them to repay.”

The worsening debt burden comes after the expiry in December of the so-called Common Framework adopted by the Group of 20 to suspend or reorganize debt repayments for low-income countries during the Covid-19 pandemic. The framework incorporates the Paris Club of mostly wealthy creditor countries as well as China, which is not a member but is the world’s largest official bilateral lender.

“Much faster action is needed, and the scope of the framework needs to be extended to middle-income countries,” Gopinath said.

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and up-to-date with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor