"We estimate that around 60% of low-income countries are in debt distress or at high risk of debt distress, double 2015 levels," chief executive Kristalina Georgieva said in a blog accompanying a note to G20 Finance.

A G20 Finance meeting will take place Thursday and Friday in Jakarta, Indonesia.

The IMF and the World Bank hope to obtain advances on the debt of low-income countries whose moratorium ended at the end of 2021.

The treatment of debt is all the more critical in view of interest rate hikes to contain rising inflation, which will put increased pressure on borrowers.

"These economies and many others will need more domestic revenue mobilization, more grants and financing, and more aid to deal with their debt immediately," Georgieva said.

The IMF pushes for the "revitalization" of the common framework of the G20.

“It should start with proposing a standstill on debt service payments during the negotiation” under this common framework.

At the start of the pandemic, the rich countries of the G20 had offered the poorest countries a moratorium on the payment of their debt service until the end of the year before extending it until the end of 2021.

In parallel with this debt service suspension initiative (DSSI), they had created, in November 2020, a "common framework" intended to restructure or even cancel the debt of countries that request it.

But one of the main sticking points in the debt restructuring process is the lack of accurate information on borrowing levels, especially loans from China.

The IMF recommends implementing faster procedures, clarifying the steps to be taken, forming creditors' committees to allow agreements on the settlement of the debt.

He also recommends making the G20 common framework "available to a wider range of highly indebted countries".

Only three countries, Chad, Ethiopia and Zambia, have applied for debt restructuring.

The IMF acknowledges having an "important role" to play since it can provide "analysis" on debt sustainability.

“We encourage greater debt transparency: by requiring greater disclosure of what a member country owes and to whom when seeking IMF financing,” Ms. Georgieva argued.

© 2022 AFP