Marrakech (Morocco ) : The International Monetary Fund and the World Bank are set to lead discussions on how developing countries can improve their resilience to debt risks and ensure continued funding for critical sectors such as healthcare and infrastructure.
The high-level conversation, which will take place in October 12 in Washington, aims to explore strategies for improving the debt management abilities of nations while stressing the pressing issue of sovereign debt sustainability.
Governments must finance investments in economic growth and development through public debt, also known as sovereign debt.
However, maintaining this debt and ensuring its sustainability are equally crucial. Debt stress can lead to severe harm, causing instability in macroeconomic stability and depriving a nation's development prospects.
The IMF's mission is to manage debt risks and resolve debt distress, taking various forms.
The IMF's analytical work has a crucial impact on identifying sovereign debt risks and offering early-stage policy advice. The IMF collaborates with the World Bank to promote debt transparency and strengthen countries' capacity to report and manage their public debt.
Member nations receive technical assistance for creating debt management strategies and establishing local currency bond markets, resulting in a robust debt structure capable of surviving economic upheavals.
A combination of adaptable measures and growth-restoration strategies is required for countries with high debt vulnerability. The IMF can make these adjustments through its support programs.
To extend financial assistance to a member, the IMF can only extend its financial assistance if a member's debt is deemed sustainable. The nation's government, despite the efforts to reduce debt, initiates negotiations for debt restructuring with its creditors.
An IMF-backed program can assist a member nation in the debt restructuring process by providing sound economic policies and new financing, enabling a return to macroeconomic stability.
The IMF is also enhancing the international framework for sovereign debt restructurings, intent on speeding up and enhancing debt reduction efforts.
The Global Debt Database, a complete database of debt-related information, has been developed to aid policymakers and researchers.
By covering a broad array of 190 advanced economies, emerging market economies, and low-income nations, the GDD provides data dating back to 1950.
This database plays a crucial role in assessing debt vulnerability and analyzing trends in debt accumulation.
Many low-income and emerging economies are grappling with substantial debt debts, restricting their capacity to invest in crucial sectors such as education, healthcare, social protection and infrastructure.
Some nations have experienced unsustainable debt levels, with the debt situation reaching unsustainable levels. This next seminar will examine strategies to bolster resilience against debt risks, including national reforms to foster growth, enhance expenditure policies, increase domestic revenue mobilization, and fortify debt management practices.
The discussion will also underscore the need for greater support from the global community.
This assistance includes concessional financing and technical assistance, as well as improvements in sovereign debt restructuring measures. The aim is to provide immediate and regular debt relief when necessary.
On October 12 the IMF and the World Bank invited stakeholders to participate in this discussion. The seminar aims to lay a foundation for sustainable economies and a brighter future for all.