Eran calls on IMF, World Bank to up support on liability management for low income countries

State Finance Minister Eran Wickramaratne has called on global lenders International Monetary Fund (IMF) and World Bank to increase assistance on liability management for low income countries, since many countries including Sri Lanka have to put in place mechanisms to deal with debt, as debt risk to debt sustainability has increased.

Wickramaratne was chairing the press conference of Intergovernmental Group of Twenty-Four (G24) on International Monetary Affairs and Development on 19 April in Washington, DC ahead of the spring meetings of the IMF and World Bank Group (WBG). He said the debt risk to debt sustainability in many countries, particularly low-income countries, has increased; therefore, responsible borrowing and policies to ensure fiscal sustainability will reduce these vulnerabilities.

“We are calling on the IMF and the World Bank to increase their assistance on liability management as an area of priority and to develop a more comprehensive and transparent debt reporting system,” Wickramaratne said.

The Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development (G-24) coordinates the position of developing countries on monetary and development issues in the deliberations and decisions of the Bretton Woods Institutions (BWI). In particular, the G-24 focuses on issues on the agendas of the International Monetary and Financial Committee (IMFC) and the Development Committee (DC) as well as in other relevant international fora.

The full transcript of Wickramaratne’s remarks at the G-24 Press Conference follows below:

Let me start with a few introductory remarks. At our meeting today, we welcomed basically the recovery of the global economy and growth and investment, and also we talked about the heightened concerns of the downsides in the medium term. We also are concerned as the G-24 about the trade friction that exists and the potential loss of confidence in a rules-based system, trading system; so we are calling on countries to attain an open, rules-based, multilateral, and equitable trading system that benefits all and strengthens the contribution of trade in the global economy.

We also continue to stress the importance of the global financial safety net with a quota-based, adequately-resourced IMF at its centre. We reiterate our call for the completion of the IMF 15th General Review of Quotas, including an agreement on a revised quota formula, on an agreed timeline, and call on the IMFC to seek consistency among its members to ensure timely completion of that process.

The revised quota formula should further shift quotas from the advanced economies to the dynamic emerging markets developing economies to better reflect their growing weight in the global economy, while protecting the quota shares and [worries] of the poor countries.

On dealing with capital volatility, the role of the international policy coordination should be given more attention. Financial inclusion is also very important to our group and an inclusive growth agenda. In this regard, we brought attention to the need to address the decline in correspondent relationships, as well as the increased cost of remittances. And as you know, this is a part of the SDG goals itself.

On debt risk to debt sustainability in many countries, particularly low-income countries, has increased; therefore, responsible borrowing and policies to ensure fiscal sustainability will reduce these vulnerabilities. We are calling on the IMF and the World Bank to increase their assistance on liability management as an area of priority and to develop a more comprehensive and transparent debt reporting system.

We also emphasised the joint responsibilities of both debtors and creditors and call for a better framework for debt resolution. We stress the importance of international tax cooperation to develop fair tax rules and avert harmful tax practices. We have created a working group on tax policies and international tax cooperation to better articulate the specific concerns that are there.

On climate, we call for all countries to implement nationally determined contributions under the Paris Climate Agreement, and on the support of advanced countries to support climate actions in emerging and developing countries, including building resilience to climate-related disasters.

On the World Bank Group, we encourage timely and successful completion of the World Bank Group capital package and call for the conclusion of the IBRD shareholding review to achieve equitable voting power between developed and developing and transition countries with an outcome that has broad support from its members. So with that, as my colleague Kenneth said, we will open the floor.