Global Roundtable Sees Rising Debt Risks for Low-Income Countries As Uncertainty Mounts

More work is needed to improve the sovereign debt restructuring process and help countries facing mounting debt service challenges, the chairs of a global debt roundtable said on Wednesday, as they released a new playbook to aid those efforts.
The Global Sovereign Debt Roundtable, formally launched in late 2022 to help accelerate progress on securing debt treatment for countries in default, met Wednesday during the spring meetings of the International Monetary Fund and the World Bank.
Co-chaired by the IMF, the World Bank, and South Africa, the current chair of the Group of 20 major economies, it includes creditors, borrowing countries, private sector executives, debt experts, and financial and legal advisers. On Wednesday, the IMF announced that economic pressures from steep new U.S. tariffs will push global public debt above pandemic-era levels to nearly 100% of global GDP by the end of the decade, as slower growth and trade strain government budgets.
The IMF's latest Fiscal Monitor projected that global public debt will grow 2.8 percentage points to 95.1% of global GDP in 2025, reaching 99.6% of global GDP by 2030. Public debt levels in low-income countries and emerging markets were already high before the COVID-19 pandemic and then rose, but have they stabilised since and look set to decline slightly or remain stable over the medium term.
A few countries remained particularly vulnerable, and many countries face elevated debt service challenges, with high interest costs and refinancing needs crowding out spending on education, health, and infrastructure investment.
This would require "advancing robust progress on debt transparency, debt management, and debtor/investor relations," the co-chairs wrote in their progress report. They said the new playbook released Wednesday was a "user-friendly document" that summarised the key steps, concepts and processes observed in recent sovereign debt restructurings.

(Source: Reuters)