Thursday, February 23, 2023

The IMF and UNDP support debt restructuring for developing and poor countries

IMF, UNDP back debt recast for developing, poor nations

 BENGALURU: Before the first meeting of G20 finance ministers and central bank governors, the International Monetary Fund (IMF) and the UN Development Programme (UNDP) called for developing countries to address their debt issues on Wednesday.

Kristalina Georgieva, the head of the IMF, mentioned high inflation and how it affects the poor and vulnerable. She also said that monetary tightening should continue. However, she also said that developing countries should be careful about how a stronger dollar and capital flows could affect them.

She appeared upbeat about the prospects for growth, with developing and emerging economies accounting for 80% of global growth this year and India accounting for 15%. India, on the other hand, is uniquely positioned to unite nations beyond its role as a global growth engine. This leadership is crucial in a world with multiple challenges and rising geopolitical tensions, and the theme of India's G20 presidency beautifully reflects this: She stated, "One Earth, One Family, One Future."

She advocated for assistance for the weak and suggested fiscal tightening to address debt sustainability, a major issue for several nations, in addition to targeted measures aimed at the poor. Even though financial conditions have improved since the last G20 meeting, we have seen how higher borrowing costs make economies with a lot of external debt more vulnerable. A further 45 percent of low-income nations are at high risk of debt distress, and approximately 15% of these nations are in debt distress. According to Georgieva, "about 25% of emerging economies are at high risk and face borrowing spreads that are 'default-like'."

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