By Andualem Sisay Gessesse (Marrakech, Morocco)- The Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva today said the Fund is currently looking into the debt restructure ng request of Ethiopia under the Common Framework for which the East African country has applied for.
“The Common Framework has been slow to deliver to countries that turn to it for support. But we see an encouraging sign. The time that taken to reach an agreement among creditors is shortening with every step. It took 11 months for the creditors of Chad to provide the fund with financial assurances needed for us to help the country. So, from our staff-level agreement to board 11 months. It took 9 months for Zambia; six months for Siri Lanka; and five months for Ghana. And now we have discussions going on Ethiopia. And I hope this trend will be sustained,” she said this morning in Marrakech, Morocco during a press conference on the sidelines of the annual meetings of the IMF/World Bank.
The Common Framework is new and it brings together a very diverse group of creditors; the traditional creditors- the Paric Club, but then new creditors like China, Saudi Arabia, Emirates, India, Brazil, and a very diverse group of private creditors. We have seen in the past it has taken quite a long time for the Paris Club to fully codify the way it functions. So my plea is pressure, speed and efficiency. But don’t throw the towel on the Common Framework. Because if you lose it, then we are back in much less predictable environment.
“I do hear the legitimate call of African countries, and not only African countries. Countries all over the world that are burdened by debt. Specially when to see some of this debt is because of climate related shocks because these countries have done nothing to create [the situation]. But we need to asses objectively and realistically. Debt cancellation requires all creditors to agree,” the IMF chief said.
“Having the cacophony of creditors and there’re different configuration in every single case, make this excruciatingly difficult. And therefore, a case-by-case approach when we identify the creditors, the creditors come together, form a creditor committee, and we as institution the IMF together with the World Bank, we provide the parameters what they need to agree on. This is today the way debt restructuring is delivered,” she said.
Ethiopia is one of the four African countries along with Ghana, Zambia and Chad, which applied for debt restructuring under the Common Framework arrangement. Global debt burden is one of the major issues being discussed during the ongoing Marrakech IMF/WB meetings opened early this week.