G20 debt relief talks should take three months, says IMF Africa head
Debt restructuring talks between creditor countries should take three months, the head of the IMF’s Africa Department told Reuters, amid criticisms of the slow speed of negotiations and calls for China to show leadership in tackling debt issues.
South Africa has offered to co-chair Zambia’s creditor committee, following China’s pledge to do so at IMF meetings last week, but Zambia’s debt sustainability analysis has yet to be finalized, Abebe Aemro Selassie said in an interview.
Zambia, which became the first pandemic-era default in 2020, Ethiopia and Chad all sought debt relief more than a year ago under the common framework process set up by the Group of 20 leading economies in response to COVID-19.
“We’ve seen significant challenges in setting up creditor committees quickly,” Selassie said, ahead of the publication of the IMF’s biannual Regional Economic Outlook for sub-Saharan Africa on Thursday.
G20 creditors should give the IMF the “financing assurances that we need” within three months of a country in debt crisis reaching a staff level agreement with the fund, he said.
Selassie welcomed China’s decision to join Zambia’s creditor committee.
“China is, you know, a relatively new official creditor,” Selassie said.
“So it doesn’t have as robust a process internally to reach all of the agreements as other countries that have been official creditors for many, many years have.”
On Zambia, which reached a staff level agreement with the IMF in December, he said it was his “understanding” that South Africa would co-chair the creditor committee with China.
A spokesperson for South Africa’s finance ministry did not respond to a request for comment, while a Zambian representative declined to comment.
Other sources close to the situation said the creditor committee was still being formed.
Selassie said he hoped that Chad and Ethiopia’s debt negotiations would also progress.
“What now remains is to finalize the required debt treatment,” he said of Chad. “And we really hope that that can happen expeditiously in the coming few weeks.”
“With … the (Ethiopian) civil war and conflict, discussions have not advanced as much as we want. We’re hopeful that that can happen in the coming months.”
Debt payments should be suspended as soon as an IMF programme is agreed, the IMF said in its Sub-Saharan Africa report on Thursday, adding that debt ratios in the region were the highest since 2000.
“This would provide an incentive for debtor countries to request debt treatment and for creditors to be constructive during negotiations.”
Source: Reuters (Reporting by Rachel Savage and Andrea Shalal; Additional Reporting by Leigh Thomas Editing by Tomasz Janowski)