Lagos, Jan. 17, 2023 – The International Monetary Fund (IMF) says about 15 per cent of low-income countries are already in debt distress.
In a new report titled ‘Confronting Fragmentation Where It Matters Most: Trade, Debt, and Climate Action’, the IMF said an additional 45 per cent of the population was further at high risk of debt distress.
It stated that debt would be a challenge that many countries would face and that fragmentation would make it harder to resolve sovereign debt crises, especially if key official creditors were divided along geopolitical lines.
IMF said that about 25 per cent were at high risk and facing default-like borrowing spreads among emerging markets.
It said that there were signs of progress on the Group of Twenty’s Common Framework for debt treatment.
While Chad recently reached an agreement with its official and private creditors, Zambia is progressing toward a debt restructuring.
Similarly, Ghana just became the fourth country to seek treatment under the Common Framework, sending a signal that it is seen as an important pathway for debt resolution.
According to the IMF, countries seeking debt restructuring under the Framework will need greater certainty on processes and standards as well as shorter and more predictable timelines.
It suggested that there is a need to improve their processes in countries not covered by the framework. (GBN)
