Tim Jones

Important point made in the background work that debt service to China looks like it has been increasing since last year, but mainly due to end of DSSI era & related suspensions. Whereas for the non-default countries, debt service to private creditors uninterrupted.

Debt payments to private lenders three times higher than to China - Debt Justice Lower-income countries are spending three times more on debt payments to private lenders than to China. Research by Debt Justice, using World Bank and IMF data, finds that between 2020 and 2025, 39% o...

Debt Justice also finds that for the 32 countries with the highest debt payments:

In 21 (66%) over 30% of external debt payments are to private lenders.

In six (19%) over 30% of external debt payments are to Chinese lenders.

Full research is at:

debtjustice.org.uk/press-releas...

Emerging countries' debt payments to private lenders dwarf those to China Lower-income countries' external debt payments to private lenders remain three times higher than payments to China, research shows, shedding light on the complex, costly web of creditors they face as they struggle to keep up repayments.

Debt payments by lower-income countries are three times higher to private lenders than to China.

For 88 countries, 39% of external debt payments are to private lenders, 34% multilateral lenders, 13% Chinese lenders, 14% other governments

www.reuters.com/business/fin...

It's hard to hear, but even lower earners should be paying more tax Let’s start an open and honest debate about who pays and how

There's an irreality about the tax debate in the UK

*No, we're not taxed that much (relative to other comparable countries)
*Public spending is far from high, let alone out of control
*Yes, we're all going to have to pay more tax

My new column for @theipaper.com
inews.co.uk/opinion/lowe...

Chad: High Risk (was denied debt relief by Glencore)

Ethiopia: In debt distress (bondholders have refused debt relief)

Ghana: High Risk

Malawi: In debt distress (No progress on debt relief in three years)

Zambia: High Risk

Restructurings during IMF programmes are meant to reduce debt risk to moderate. Of those taking place since Covid, none have yet done so:

While Ghana has reached debt restructuring deals with bondholders and government creditors, there are still no deals over $2.7 billion owed to other private creditors.

It is now 18 months since the deal with government creditors and a year since the deal with bondholders

The IMF assumes Ghana's real GDP will grow 5% a year, every year. And this will be done while having a primary budget surplus of 1.5% of GDP a year - around 10% of government revenue.

This means for every 10 cedis the government collects in taxes, only 9 will be spent in Ghana

Ghana has restructured much of its external debt but the latest IMF assessment says there is still a high risk of 'debt distress'

The IMF says Ghana will reach moderate risk by 2028. But external debt payments are right on the threshold - any shock will keep Ghana at high risk:

Sri Lanka's real public spending per person (not including interest payments) is only expected to reach 2015 levels in 2029.

And that assumes continued GDP growth and no major economic shocks.

In 2025 public spending is expected to be 9% less than a decade ago.

The debt is only being paid through Sri Lanka having a primary surplus of 2.3% of GDP - which is 15% of government revenue.

That means for every 7 rupees the government collects in tax, it only spends 6.

The IMF says Sri Lanka is still at high risk of being unable to pay its debt / need to restructure again

[The original restructuring was based on there being a 50:50 chance of another restructuring being needed]

Sri Lanka's external debt payments will remain extremely high for at least the next decade, averaging 22% of government revenue between 2024 and 2035.

That keeps Sri Lanka in the highest 20 countries for government external debt service, even AFTER 'debt relief'

The IMF's latest update on Sri Lanka is out - GDP is higher than they expected a few years ago, which means bondholders will receive $1.2bn more in debt payments over the next 15 years.

Bondholders will now be paid 30% more than government creditors after the debt restructurings

Sri Lanka to make higher payouts on GDP linked bonds, but debt ratio to fall: IMF | EconomyNext Sri Lanka is on track to make higher payouts on macro-linked bonds as dollar gross domestic product grows, but debt sustainability is maintained amid a strong economy, an International Monetary Fund r...

Economy doing relatively well: Coupons could rise by 25-75 basis points depending on bond series, and principal would go up by 13 percent higher principal.

economynext.com/sri-lanka-to...

IMF expecting Sri Lanka to borrow $1.5bn through foreign currency bonds in 2027.

Yes, we do

IMF: Good news, Nigeria can keep paying its debt!
IMF: Bad news, food insecurity and poverty have risen

IMF don't say: Nigeria's public spending per person has fallen over 25% since 2015, and is projected to fall 50% by 2030

@josephestiglitz.bsky.social talked of the high interest rates charged by private creditors, and how they continue to get repaid via new loans

The private creditors profit while countries in the Global South go further and further into debt

We need to change the laws that incentivise this!

We’re at the multi stakeholder roundtable on sovereign #debt here at the #FfD4 conference in Seville

Follow this thread for highlights 👇

Thank you

Have you got a link to the new CPIAs?

If the IMF decide is unsustainable, I'd guess it will be default and restructure foreign currency private and bilateral debt. Have to keep paying multilateral debt. No idea on domestic currency debt.

For what it's worth, yes next IMF DSA will almost certainly say Senegal is high risk, rather than moderate risk, of debt distress

ie, IMF has no metrics to base it's decision on, uses pure judgement

"under both the baseline and realistic shock scenarios are politically feasible and socially acceptable, and consistent with preserving growth at a satisfactory level while making adequate progress towards the authorities’ development goals.”

IMF definition of sustainable debt: "high likelihood that a country will be able to meet all its current and future financial obligations, [which implies] that the debt level and debt service profile are such that the policies needed for debt stabilization...

All those ratios define whether the IMF says a country is at low, moderate or high risk of debt distress. But that rating has no impact on IMF lending. It is whether the debt is sustainable of unsustainable that influences IMF lending decision.

IMF definition of debt sustainability nothing to do with ratios in DSAs and debt carrying capacity. It is just whether the IMF "thinks" a government can keep paying without triggering mass social unrest.

Even if IMF says debt is unsustainable, IMF can still lend if Senegal starts restructuring.

Re-upping this CGD blog on debt transparency for #FFD4:

Many loans to gvrnmts are not public. So taxpayers are paying off shady deals. When Cameroon made the rare move to publish all their loan contracts, they faced better lending conditions than the rest of Africa

www.cgdev.org/blog/publish...