Debt restructuring talks between creditor nations are expected to take three months, the head of the IMF’s African department told Reuters, amid criticism of the slow pace of talks and calls for China to step up. leadership in resolving debt issues.
South Africa has offered to co-chair Zambia’s creditors’ committee, following China’s pledge to do so at IMF meetings last week, but Zambia’s debt sustainability analysis has not yet been finalized, Abebe Aemro Selassie said in an interview.
Zambia, which became the first pandemic-era defaulter in 2020, Ethiopia and Chad all requested debt relief more than a year ago under the common framework process set put in place by the Group of 20 major economies in response to COVID-19.
“We encountered significant difficulties in quickly setting up creditors’ committees,” Selassie said, ahead of the release of the IMF’s semiannual regional economic outlook for sub-Saharan Africa on Thursday.
G20 creditors should give the IMF the “financing assurances we need” within three months of a country in debt crisis reaching a services-level agreement with the fund, he said. declared.
Selassie welcomed China‘s decision to join Zambia’s creditors’ committee.
“China is, you know, a relatively new official creditor,” Selassie said.
“So it doesn’t have as strong an internal process to do all the deals as other countries that have been official creditors for many, many years.”
On Zambia, which reached a staff-level agreement with the IMF in December, he said he “agreed” that South Africa would co-chair the creditors’ committee with China.
A spokesman for South Africa’s finance ministry did not respond to a request for comment, while a Zambian representative declined to comment.
Other sources close to the situation said the creditors’ committee was still in formation.
Selassie said he hoped debt negotiations for Chad and Ethiopia would also move forward.
“All that remains is to finalize the required debt treatment,” he said of Chad. “And we really hope that can happen quickly in the next few weeks.”
“With… the civil war and the (Ethiopian) conflict, the discussions have not progressed as much as we would like. We hope this can happen in the months to come. »
Debt payments are expected to be suspended once an IMF program is agreed, the IMF said in its report on sub-Saharan Africa on Thursday, adding that debt ratios in the region were the highest since 2000.
“It would encourage debtor countries to seek debt treatment and creditors to be constructive during negotiations.”
Source: Reuters (Reporting by Rachel Savage and Andrea Shalal; Additional reporting by Leigh Thomas Editing by Tomasz Janowski)