IMF aims to complete Chad, Zambia debt restructuring by year-end

Debt restructuring efforts for Chad and Zambia could be completed by the end of the year, which would pave the way for more countries to seek help, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said.

Speaking with civil society groups at the start of the annual IMF and World Bank meetings, Georgieva said a Group of 20 initiatives launched in late 2020 had been slow to become operational, but she was overall optimistic about the cases of Chad and Zambia, who together with Ethiopia were the first to request help. The Bulgarian-born economist said the IMF was pressing for more predictability and timely resolution of requests for help under the G20 Common Framework. It was also critical to expand the framework to include middle-income countries, she said. The IMF was also working on how to include collective action clauses in future debt contracts that would allow immediate suspension of debt service payments if a country experienced a climate shock, Georgieva said.

In a separate but related development, Chad’s creditors are close to reaching a debt relief agreement, which would be the first under a new G20 debt restructuring framework, a French finance ministry source has said. Progress has been glacial with some Western G20 members, as well as IMF and World Bank officials, saying that China, the biggest creditor to many African countries, is dragging its feet on reducing countries’ debt burdens.

As host to the Paris Club of mostly rich, Western government creditors, the French finance ministry is deeply involved in the debt-relief discussions under the G20 framework and is co-chair with Saudi Arabia of Chad’s creditor committee. Although Chad is currently benefitting from high oil prices, the source added that it was important that both government and private sector creditors be ready to act in case debt servicing conditions become more difficult for the country.