World Bank’s Banga says more bilateral debt forgiveness needed – Business & Finance

WASHINGTON: World Bank President Ajay Banga said on Thursday that bilateral creditors need to provide more debt forgiveness to poor debt-distressed countries, and that the development lender was working on ways to ease service costs to improve development outcomes.

Banga, speaking to reporters ahead of World Bank and International Monetary Fund annual meetings next week, said the bank has already answered calls for its share of debt relief in restructurings by providing billions of dollars in additional grants and deeply discounted loans to debtor countries.

Some $16 billion to $17 billion has gone to Zambia, Chad, Ethiopia and Ghana during their slow and painful debt restructuring processes.

“Effectively, what we’re doing is giving them the lifeline they need, whether you do it as a debt forgiveness or you give them a grant,” Banga said. “Debt forgiveness is required, but not from us. It’s required from those creditors. That’s the issue we’re trying to work our way through.”

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Banga did not specifically mention China, which has been among the largest creditors to debt-distressed countries and has been slow to agree to reductions in debt principal.

Banga said that the World Bank was working with several countries on potential ways to re-profile debt to reduce servicing costs “and take the distance and put it into development, life, education, what you would call a debt-for-development swap.”

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