Chief of the International Monetary Fund (IMF) Kristalina Georgieva has stated that changes to the G20 Common Framework on debt restructuring were needed to speed up debt treatments, freeze debt service payments once a country requested help, and open the process to middle-income countries like Sri Lanka.

“We are concerned that there is a risk for confidence in debt resolution to be eroded at a time when the level of debt is very high,” Georgieva said, speaking to foreign media.

“We don’t see at this point ... a risk of a systemic debt crisis,” she said, adding that countries in debt distress were not large enough to trigger a crisis that would threaten financial stability.

Meanwhile, World Bank President David Malpass is due to join a meeting in China next week, with heads of other international institutions and Chinese authorities, including Georgieva and officials from China Development Bank and the Export-Import Bank of China.

Accordingly, the country’s approach to debt relief for poorer countries, COVID-19 policies, property sector turmoil and other economic issues will be discussed at the meeting.

During the Reuters NEXT conference in New York, Malpass stated that the poorest countries in the world now owe USD 62 billion in annual debt service to official bilateral creditors, an increase of 35% over the past year. 

Warning that the increased burden is increasing the risk of defaults, he remarked that two-thirds of this debt burden is now owed to China.

-with inputs from Reuters