IMF Chief Unveils New Debt Restructuring Playbook

By Andrea Shalal
WASHINGTON (Reuters) – IMF chief Kristalina Georgieva announced plans on Thursday for a new playbook aimed at assisting countries considering debt restructuring. She urged heavily indebted nations to proactively work towards restoring fiscal sustainability.

Georgieva mentioned that the Global Sovereign Debt Roundtable, which comprises creditors, borrowers, the IMF, the World Bank, and G20 major economies, would soon release this document. Established in February 2023, the Roundtable is set to convene in a closed-door session next Wednesday during the upcoming IMF and World Bank spring meetings in Washington.

“Countries with unsustainable public debt should move proactively to restore sustainability, including in some cases by taking the difficult decision to seek debt restructuring,” Georgieva stated in a speech ahead of the meetings.

She noted that smaller nations might face significant spillover effects from global trade tensions, potentially leading to lower growth and rising inflation. Nonetheless, they should prioritize putting their finances in order, addressing high debt levels, and maintaining exchange rate flexibility.

Next week, debt issues may be overshadowed by broader concerns about the trade war initiated by U.S. President Donald Trump, which has resulted in numerous tariffs affecting aluminum, steel, and automobiles, along with a 10% universal tariff imposed on all countries.

According to sources, the playbook will offer guidance for finance ministers and central banks, clarifying existing processes for debt restructuring. This tool aims to help policymakers navigate the complexities of the restructuring process.

While further details remain undisclosed, Eric LeCompte, executive director of the Jubilee USA Network, a coalition of advocacy groups, praised Georgieva’s emphasis on preemptive debt restructurings to prevent deeper crises.

LeCompte expressed concern about the widespread tariffs introduced by the U.S. and subsequent countermeasures from other nations, fearing that high debt levels and inflation may particularly impact middle-income countries. Debt experts are specifically worried about challenges faced by countries in Sub-Saharan Africa, Asia, and even larger economies like South Africa, India, and the Philippines due to their tariff exposure.