Chief economist says common framework has failed to provide any new money to world’s poorest countries since it was set up in 2020
The mechanism for providing debt relief to the world’s poorest countries is failing to deliver and requires a major rethink, a senior official at theMore than half the 75 countries deemed poor enough to be eligible for concessional finance from the World Bank are either in distress or close to it, and Gill said cripplingly high repayments were entrenching poverty.Interviewed by the Guardian at the bank’s spring meetings in Washington, Gill said: “We have to recognise the problems.
He said lessons should be learned from the blueprint drawn up in the 1980s by the then US treasury secretary, Nicholas Brady, to deal with a previous debt crisis. Theprovided a systematic approach to debt relief, ensured private creditors were part of the process from the start, and involved creditors accepting losses in return for assurances about the ability of debtor countries’ capacity to repay.
Gill said another weakness of the common framework was that its secretariat was the Paris Club – a group of 20-plus creditor countries mostly in the developed west. China – which has become a major creditor – is not a member and has refused to be forced into accepting terms agreed by the Paris Club. “You can’t have the Paris Club playing in the casino with Chinese money,” Gill said.
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