Low-cost financing supports debt restructuring—IMF head
International Monetary Fund (IMF) resident representative for Malawi Nelnan Koumtingue has backed the fund’s approach to debt restructuring amid concerns over the country’s negotiations with bilateral and commercial creditors.
He was responding to assertions that the absence of multilateral development banks (MDBs), which hold about 65 percent of the country’s external debt, would undermine the effectiveness of any debt restructuring process.
In an interview, the IMF head said the concessional financing that the two Bretton-Woods institutions provide, most of which are offered zero percent interest, are “de facto contributing to debt restructuring”.
Said Koumtingue: “The financing itself carries some sort of debt relief. By offering zero percent interest, the IMF can provide financial support to countries without putting pressure on their fiscal space [by burdening them with interest payments].”
Under the existing terms, only a third of the country’s debt owed to commercial and bilateral creditors will be subject to debt International Monetary Fund (IMF) resident representative for Malawi Nelnan Koumtingue has backed the fund’s approach to debt restructuring amid concerns over the country’s negotiations with bilateral and commercial creditors.
He was responding to assertions that the absence of multilateral development banks (MDBs), which hold about 65 percent of the country’s external debt, would undermine the effectiveness of any debt restructuring process.
In an interview, the IMF head said the concessional financing that the two Bretton-Woods institutions provide, most of which are offered zero percent interest, are “de facto contributing to debt restructuring”.
Said Koumtingue: “The financing itself carries some sort of debt relief. By offering zero percent interest, the IMF can provide financial support to countries without putting pressure on their fiscal space [by burdening them with interest payments].”
Under the existing terms, only a third of the country’s debt owed to commercial and bilateral creditors will be subject to debt restructuring.
Minister of Finance and Economic Affairs Simplex-Chithyola Banda is on record as having said he was confident Malawi would succeed in its debt negotiations.
He said : “The negotiations with our creditors are going well. China and India, twho hold most of our commercial debt, are on board with our proposal.”
