The debt restructuring quagmire for low-income countries

Debt restructurings are taking too long — and the international lending community, especially the global financiers who descended on Washington, D.C., this week for theBoth countries saw proposed deals with private-sector bondholders fall through.

Ghana said on Monday that the IMF rejected its deal with bondholders, on the grounds it didn't reduce debt to sustainable levels, as the FThave combined to the point at which some 60% of low-income countries are in debt distress or at risk of it, per theThe stalemates with Ghana and Sri Lanka are "an expression of the incredibly complicated landscape right now," Martin Mühleisen, a senior fellow at the Atlantic Council, tells Axios.

One complicating factor: Over the last decade, China has become a major lender to emerging market countries. It has been slow to agree to deals, customary among sovereign creditors, that adjust terms or delay repayments.a new policy on Tuesday to address the recent "significant delays" in its ability to provide financing to countries enmeshed in debt restructuring talks.

In a nutshell: The policy change will allow the fund to provide new loans if a "credible" process of talks with official sector creditors is underway, rather than waiting for a deal agreement.Even if the IMF starts lending into official-sector arrears, that doesn't even begin to address the issue seen in Ghana and Sri Lanka, where a deal with the private-sector bondholders is nowhere to be found.

For now, the industry's best hope for progress lies with the Global Sovereign Debt Roundtable, which kicked off last year as a collaborative series of problem-solving talks involving public and private creditors, multilateral development banks, and borrowing countries themselves.this week that these talks are helping to build consensus on ways the process can be improved in the future.

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