IMF, World Bank to discuss how to reduce debt risks

IMF, World Bank to discuss how to reduce debt risks

Marrakech (Morocco ) October 2 : The International Monetary Fund and the World Bank are scheduled to lead discussions on how developing countries can enhance their resilience to debt risks and ensure continued funding for critical sectors such as healthcare and infrastructure.

The summit, scheduled for October 12 in New York City, aims to explore strategies for improving nation debt management capabilities while addressing the pressing issue of sovereign debt sustainability.

Governments can finance economic growth and development by leveraging public debt, also known as sovereign debt.

The ability to manage this debt and ensure its sustainability are both crucial, but maintaining it is also crucial. Falling into debt distress can have severe consequences, jeopardizing macroeconomic stability and disrupting a nation's development trajectory.

The IMF's focus is on managing debt risks and resolving debt distress, taking various forms.

The IMF's analysis is essential in identifying sovereign debt risks and offering early-stage policy advice. The IMF collaborates with the World Bank to promote debt transparency and strengthen nations' capacity to report and manage their public debt.

Member nations offer technical support for establishing debt management strategies and establishing local currency bond markets, building a robust debt structure capable of overcoming economic shocks.

A combination of adaptations and growth-restoration strategies is necessary for countries with advanced debt vulnerability, which require a combination of adjustment measures and growth-restoration strategies. The IMF's support programs can facilitate these adjustments.

The IMF can only extend financial assistance if a member's debt is deemed sustainable. Despite the efforts, the government is obligated to initiate debt restructuring negotiations with its creditors in cases where debt is unsustainable.

An IMF-backed program can assistance a member nation in the context of debt restructuring by offering sound economic policies and new financing, enabling a return to macroeconomic stability.

The IMF is actively involved in enhancing the international framework for sovereign debt restructurings, aiming to speed up and optimize debt reduction efforts.

The Global Debt Database, a comprehensive database of debt-related information, has been developed to aid policymakers and researchers.

The GDD is a comprehensive database of 190 advanced economies, emerging market economies, and low-income countries, covering a broad range of emerging market economies and low-income countries since 1950.

The database is crucial in assessing debt vulnerabilities and analyzing trends in debt accumulation.

Debt is a major challenge for low-income and emerging economies, restricting their capacity to invest in crucial sectors like education, healthcare, social protection and infrastructure.

Some nations have experienced a financial crisis that has resulted in the debt crisis reaching unsustainable levels. This next seminar will explore strategies to build resilience against debt risks, encompassing domestic reforms to boost growth, enhance expenditure policies, enhance domestic revenue mobilization, and fortify debt management practices.

The talks will also stress the need for increased support from the global community.

This assistance includes concessional financing and technical assistance, along with improvements in sovereign debt restructuring measures. The aim is to provide immediate and unpredictable debt relief when necessary.

The IMF and the World Bank invited all stakeholders to participate in this discussion on October 12 on the IMF's website. The seminar aims to establish a positive future for all, as it seeks to establish a path toward resilient economies and a brighter future for all.