US calls on IMF and WB to develop a joint action plan on debt transparency and sustainability

The US has called on the IMF and the World Bank to develop a joint action plan on debt transparency and sustainability to guide future work, ensure strong coordination between institutions, and boost visibility around these efforts.

The action plan should include concrete steps to obtain more comprehensive debt data from member countries, to more clearly flag data deficiencies in debt sustainability analyses, and to enhance debt sustainability through strengthened use of debt limits and non-concessional borrowing policies, US Treasury Secretary Steven Mnuchin told the IMF during its annual Spring meeting.

"We call on IMF and World Bank management to develop a joint "action plan" on debt transparency and sustainability to guide future work, ensure strong coordination between institutions, and boost visibility around these efforts," Mnuchin said.

According to the Treasury Secretary, the rise of official bilateral, "plurilateral" and private creditor lending, especially to countries at high risk of debt distress, is complicating debt resolution processes necessary to re-establish debt sustainability.

"Increasingly we see instances where LICs (low Income countries) have borrowed excessively, and unsustainably, from large, often non-transparent emerging sovereign creditors like China and / or private creditors," he said.

Clear restructuring rules do not exist for these cases, creating the risk of a complicated restructuring process, creditor losses, and a decline in real median incomes in the debtor country, the Treasury Secretary rued.

The IMF, he said, can play a crucial role in these cases, by engaging more regularly and robustly with these actors; promoting the use of debt sustainability frameworks by LIC governments; enforcing the Debt Limits Policy in applicable country programs and explaining the limits to creditors; and fostering best practices around lending, including transparency and responsible burden sharing with non-traditional creditors.

Mnuchin said the US strongly believe that unfair global trade practices impede stronger US and global growth, acting as a persistent drag on the global economy.

"Ensuring that trade is free, fair, and reciprocal will boost global trade and support stronger, more sustainable growth. To help advance these objectives, the IMF should be a strong voice for its members to dismantle trade and non-tariff barriers and to protect intellectual property rights," he said.

Noting that strong growth in the United States, Europe, and elsewhere contributed to a broad-based global economic rebound in 2017, Mnuchin said expanding and boosting this growth momentum throughout the world requires concerted structural reform across the membership.

"Each of us should comprehensively evaluate our tax and spending policies and regulatory frameworks to ensure they actively promote business investment, facilitate productive lending, encourage employment, and support real median income growth," he said.