Experts propose 'growth and investment reset' to aid debt-ridden developing countries
TLT•The Rockefeller Foundation and its partners proposed a “Growth and Investment Reset” to help heavily indebted developing countries access financing for growth and investment. Interest payments average more than 10% of revenues in developing countries, and about 40 countries with sustainable debt levels could be eligible.
1. Proposed financing initiative
The Rockefeller Foundation and its partners proposed an initiative to coordinate the efforts of the IMF, World Bank, bilateral official creditors and private lenders to help heavily indebted developing countries access fresh funding. The plan aims to provide affordable financing for economic growth and investment.
2. How the plan would work
The proposal calls for the IMF to create a dedicated program providing significant amounts of long-term financing to vetted countries, in coordination with World Bank lending and guarantees. It also calls for bilateral creditors, including China, to roll over debt from participating countries, and for scaled-up guarantees to help refinance private loans where debt is unsustainable.
3. Debt burdens and next steps
Interest payments exceed 10% of revenues in developing countries on average and surpass public investment outlays in 10 countries, Christina Segal-Knowles said. About 40 countries with sustainable debt levels could qualify, though some countries would still need debt restructuring. The authors aim to secure political agreements and advance the initiative under next year's G20.
