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The International Monetary Fund (IMF) Chief Kristalina Georgieva on Saturday acknowledged that there are some disagreements over restructuring debt for distressed economies. She also said banning private cryptocurrencies should be an option.
She was talking to reporters after co-chairing a Debt Roundtable jointly with Finance Minister Nirmala Sitharaman and World Bank President David Malpass on the sidelines of the G20 Finance Ministers and Central Bank Governors’ Meeting under India’s presidency.
Debt restructuring has become a critical issue in South Asia as India’s neighbours, Sri Lanka, Bangladesh and Pakistan, seek urgent IMF funds due to an economic slowdown caused by the Covid-19 pandemic and the Russia-Ukraine war.
“On debt restructuring, while there are still some disagreements, we now have the global sovereign debt roundtable with consideration of all public and private creditors,” Georgieva said, while adding that she had just finished a session in which it was clear that there is a commitment to bridge differences for the benefit of countries.”
Echoing the same sentiment, Spain’s Vice-President and Minister for Economy and Digitalization, Nadia Calviño, said there were different views around the table as to how to approach it, but “I think there is common agreement and shared agreement on the view that debt relief is one of the instruments that can provide comfort to the most vulnerable countries.”
On Friday, China, the world’s largest bilateral creditor, urged G20 nations to conduct a fair, objective and in-depth analysis of the causes of global debt issues, as the clamour for lenders to take a large haircut, or accept losses, on loans grows louder.
Also, Prime Minister Narendra Modi flagged the threat of unsustainable debt levels to the financial viability of many countries, even as he urged G20 member-nations to focus on the most vulnerable citizens and strengthen multilateral development banks to meet global challenges.
Regulating cryptocurrencies
Apart from restructuring debt, regulating cryptocurrencies is another priority area for India, which Georgieva agreed with. “We have to differentiate between central bank digital currencies that are backed by the state and stable coins, and crypto assets that are privately issued,” Georgieva said. Further, “there has to be a very strong push for regulation. If regulation fails, if you’re slow to do it, then we should not take off the table banning those assets, because they may create financial stability risk.”
Meanwhile, in a series of tweets, the Finance Ministry said the roundtable brings together key stakeholders to understand debt restructuring challenges and address debt vulnerabilities. The Finance Minister flagged the need to acknowledge today’s diverse creditor landscape and build a common understanding of challenges and ways to address them.
She called for the voices of the vulnerable and under-represented debtor countries to be heard through the G20. Georgieva and Malpass called for faster debt restructuring processes and noted the debt forum was an opportunity to work together and help vulnerable countries, one of the tweets said.
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