World Bank promises ‘concessionality’ in debt restructuring

BENGALURU: The World Bank will “provide as much concessionality to the debt treatment” for distressed economies as possible, its president told a meeting with the International Monetary Fund, India, China, and other creditor nations on Saturday.

The remarks come amid calls by China, the world’s largest bilateral creditor, that global lenders should take haircuts on loans extended to developing nations hurt by the impact of the Russia-Ukraine war and the COVID-19 pandemic.

The United States, meanwhile, has repeatedly criticised China over its “foot-dragging” on debt relief for dozens of low-and middle-income countries.

“The World Bank is committed to providing net positive flows in a way that maximizes concessionality in the restructuring process,” David Malpass said at the Global Sovereign Debt Roundtable in India’s Bengaluru city on the sidelines of the G20 financial leaders’ meet.

“We will provide as much concessionality to the debt treatment as possible.”

Malpass also said that he noted “constructive remarks” by a deputy China central bank governor at a G20 meeting on Friday that “gave room to move forward” on settlement of debt issues.

Reuters reported earlier this month that India, the current president of the G20 bloc, is drafting a proposal for G20 countries to help debtor nations by asking lenders to take a large haircut on loans.

On Friday, Chinese Finance Minister Liu Kun told the G20 financial leaders that international financial institutions and commercial creditors should follow the principle of “joint action, fair burden” in debt settlements.