China and private creditors must join debt relief scheme: IMF

International Monetary Fund chief Kristalina Georgieva calls for increased participation in debt relief for poor countries, saying this was key to its success and a potential framework for debt restructurings

China and private creditors must join debt relief scheme: IMF
IMF managing director Kristalina Georgieva wants China and private creditors to participate in global relief scheme for poor countries. File photo from the Global Women's Forum in Dubai in February 2020 by Christopher Pike for Reuters.

WASHINGTON: International Monetary Fund managing director Kristalina Georgieva called on Wednesday for increased participation in debt relief for poor countries by private creditors and China, saying this was key to its success and a potential framework for debt restructurings.

Georgieva told a news conference that private creditor participation in a debt service suspension program for poor countries has been largely non-existent, with only three of 44 countries signed up for the program reaching out to private creditors.

An IMF spokesman said that the total had recently risen from 43 countries when heavily indebted Mozambique signed up for the programme that suspends payments on official bilateral debt through June 2021.

"What we have seen, regrettably, is the private sector shied away, and the countries themselves shied away from asking the private sector (for debt relief) because of fears that that may erode their future access to market. Access they have earned the hard way in previous years," Georgieva said.

She added that only some of China's official lending entities have participated.

"What we are also hearing from China is a recognition that they are a relatively new creditor, but they are very large creditor, and they need to mature domestically in terms of how they handle their own lenders, the coordination among them," Georgieva said. 

(Reporting by David Lawder; Editing by Christopher Cushing)