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COVID debt restructuring push not advanced enough, IMF chief cautions

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Economy1 hour ago (Jun 15, 2021 07: 15PM ET)

© Reuters. FILE PHOTO: International Monetary Fund (IMF) Managing Director Kristalina Georgieva arrives in the Grand Palais Ephemere for the Financing of African Economies Summit, in the Champs de Mars in Paris, France May 18, 2021. Ian Langsdon/Pool through REUTERS

By Marc Jones

LONDON (Reuters) – Efforts to restructure unsustainable debt burdens in some of world’s poorest countries hasn’t made enough progress, the head of the International Monetary Fund Kristalina Georgieva said on Tuesday.

Speaking on webcast, the IMF’s managing director said some progress was being made in Chad, which combined with Ethiopia and Zambia is now a test case for a global debt relief program called the”Common Framework”, more was needed.

“I’m pleased to say that we are seeing progress on Chad. I hope we would be successful to bring these cases to fruition so that other countries – because it is not only these three countries that are in a difficult situation – step forward early.”

A cornerstone of the Common Framework is that private sector banks and investment capital match G20 authorities in agreeing to writeoff or postpone repayments on money they’ve lent to strained low-income countries previously.

The reality just three countries have utilised the programme so far reflects governments’ worries, however, that the process of defaulting would lock them out of international borrowing markets for an indefinite period of time.

“In a highly diversified environment with so many different personal lenders and other creditors, I must acknowledge, we are not where we should be,” Georgieva said of the lack of take up for the debt relief plan.

“We have to continue to work relentlessly, ideally building from the DSSI (Debt Service Suspension Initiative) into the Common Framework to a much more prudent approach to debt restructuring, and in the Fund this is a top-of-mind priority.”

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