 So, good morning once again. I'm Tuli Urikala from the Finnish Ministry of Finance and I will be moderating our next panel on sovereign debt. And this is obviously no small topic as we have seen already yesterday and this morning. It is safe to say it is also a topic and challenge of many countries in the world, whether rich or poor. But the nature of the challenge varies by country and today we are here to discuss sovereign debt from a developing country perspective. Shari's presentation gave us a real kickstart to the day, so thank you for that. Next we wish to hear from our panelists what they see as the emerging sovereign debt challenges in developing countries and what may be the possible solutions. Just a few words from my side to start it up. So, as we have already discussed from different angles, as the legacy of the pandemic many developing countries are left with even higher levels of sovereign debt than before. Now many of these countries are already in or risk falling into debt distress and reversing their development gains. Going forward the long-term development challenges have of course not gone anywhere either. Responding to all of these challenges and achieving economic growth will require sustainable investments and other reforms while debt burdens need to be carefully managed. So generating growth while carefully managing debt is again a shared challenge of countries of all income levels, also our country. And on top of it all we have to remain mindful of how the market does not always absorb debt quite like it has in recent years. Which may reflect not only in prices but in volumes as well. We have not discussed it that much and this is my last point. But obviously the developed country policy shifts have an impact on developing countries too, including through the financial markets. So let me now move on to introduce our speakers. With us here today we have Andrea Prespitero, Prespitero of the IMF. Andrea is currently Senior Economist at the IMF and CEPR Research Fellow in the International Microeconomics and Finance Program. He has also held assistant professor positions in different universities as well as published broadly in top journals. We have also Arjan Deha from the IDRC. Arjan leads the Supporting Inclusive Growth Program at the International Development Research Centre IDRC in Canada. He has over 20 years of experience combining research and practice in international development and public policy. And last but not least as we always say, Maureen Ware joins us from the Central Bank of Kenya and has worked extensively on debt in Africa. She has previously served also at WIDER and WTO and her peer reviewed research extends from macro policy topics to gender and development. Each panelist will now have up to 10 minutes for presentations and at the end we will have a joint session of questions and answers. So if we start with Andrea, what do you think makes the current sovereign debt situation or even crisis different from the previous ones? So please go ahead. Thanks a lot for the introduction and thanks to Kunal, Tony and everyone and the Bank of England and WIDER for hosting. I'm sorry I missed a part of the conference yesterday. So I guess talking later I may sort of overlap on something that has already been said yesterday. But let me give you like a few sort of a few charts and then try to put maybe some of the things that already be mentioned including this morning in a sort of maybe slightly different order. But I don't know how much new things there will be. So the first thing I want to sort of point out like as this come from ongoing work that we are doing at the fund or sort of on public debt. One way of again looking at the same thing from a slightly different angle. You can basically you know that the solid line is the share of countries which are currently in a sort of debt search, meaning that is increasing for quite some time. And as you can see that if you look at this historically that been what's been happening right now, meaning in the 2000, it's very similar sort of in term of trend of what happened in the 70s. And what you know is that after sort of the big upsurge in that in the 70s, there's been this big wave of restructuring vis-à-vis official or private craters. You see what is happening in the 2000. Nothing has been happening. You know this data ends in 2020. You can sort of push it a little bit farther 2021. You can include the SSI and you have something, but you know, the SSI is very specific. Let me come back on that. There is not much in terms of yet in terms of restructuring and so on. And you can argue this been driven because of like very sort of soft monetary policy, very good financing condition and so on and so forth. But you know if history repeats himself and we don't know if history repeats itself. And then you can argue that, you know, sort of that sort of restructuring is going to come at some point. And I guess everybody more or less is saying that between yesterday and today. What happened? And again, this is again, nothing new. But you know, if you want to compare the past form with what is it is now clearly everybody's talking about this changing radar landscape. And here is basically the total stock of public external debt for the SSI eligible countries in the last 20 years divided by creator type and it's, you know, generally people split party club multilateral and all the rest. But even within all the rest, you see that all the rest is mostly China and bold dollars. And then the big role of sort of disemerging donors is large and especially in some countries like why China is more or less a relevant creator for most of low income country, especially in Africa. Bond dollars is much more concentrated in a few, but still like on average, there is a big change. And I guess that the issue already came out instead of, you know, if you need to restructure one thing is restructuring with like to create a mini multilateral and bilateral or, you know, ready plan early on. Different thing is restructuring with such a diverse pool of craters. And you know, I guess the delay of the common framework. China is important. And so there are many, many things that one can say, let's do how China can affect the lending to developing countries, which could be the implication. I don't have the time and to be honest, I don't have any of the expertise to go into that. Let me just point out two things. One is like very simple. If you want to look at the prosyclicity of lending, we tend to argue and there is an all literate on foreign aid in which like Tony and other in the room contributed. We generally want a to be counter cyclical. That's what we want. And you know, if you these are basically data from, from, from the World Bank, if you just regress aid on grow. And this could give you some sort of very rough measure of prosyclicity. Paris and multilateral club tend to be counter cyclical, especially the bilateral donors. If you look at China is basically if anything is prosyclical, I don't know how much trust I can put in those sort of coefficient. But if anything is clearly doesn't signal that it's not the same at party club. So that's one problem. The other one is like we can look at seniority. And what is interesting here is that this is basically a replication of a chart that Christophe Trebash and in the paper on seniority of creditors. And what is nice here is that you look at China, China is the red line. China tend to be like a sort of very junior say creditor at the beginning of the period. If you look at the end of the period becomes like a senior creator, very similar in some countries to sort of multilateral like the IMF and others. And so looking forward, this is joined sort of not even work. Just thinking with Tito Cordelli, which one could sort of think which could be the implication of having like in some countries to be creators like China and the fund, which share very similar sort of seniority status. And this, you know, we can think of very sort of complicated implication because of that. Then the other issue about China, there is hidden debt. People have talked a lot about that. Carmen Reiner and a lot of collaborators in the World Bank. This is basically the chart as before, updated 2021 without the surges. But, you know, if you're on top of the restructuring with party club and private catering, you put China and in this case also the SSI. You can see that there are already a lot of restructuring coming over together with these big waves of big sort of surges in debt. So that's another way which you can think that China is special. And this clearly connect to hold the discussion about transparency and sort of having more information about outstanding that position and restructuring. Then going home wise, and then if you have to restructure, I guess what is important to think is about which are the costs of restructuring. And there is a large literature again, many people including Ugo in contributed on that. Here I want to flag like a slightly different sort of a new flavor on the discussion of restructuring, which people don't look exactly at the economic costs, but mostly at the social costs, which I think it's very nice. It's this nice paper by Carmen Reiner at the World Bank, which here basically do synthetic control and let's say that the dashed line is sort of an indication of how country would have gone without a sovereign default and the solid line is how country actually gone after the fault. And here you can look at sort of there is economic story that is big gap in GDP. And on the right hand side, there is sort of the social in this case health story in which, you know, this is measure of color intake. They do with poverty, do with energy consumption. So color intake is just because of better data, but still like there are large social costs from the fault. And I think something we should consider looking going forward. So what can people do about that? So how the international community reacting? First of all, there was been the DSSI and second of all the G20 common framework. On the DSSI has been measuring the previous presentation like there is discussion about is a liquidity crisis is a solvency crisis that gets at the beginning with COVID. People rightly saw thought it was a liquidity crisis and the natural sort of reaction to a liquidity crisis like I just postponed payment. So was successful or not? We have a paper on that with a couple of quotas in which actually our answer is yes. So if you have a liquidity crisis, the policy response from the G20 was yes. I postponed that service payment. I tried to provide more liquidity and in fact what we show here is that if you look at spreads, actually spreads went down. So countries with access to market, which is like a subset of those countries were able to borrow a cheaper terms because of liquidity crisis. That was I guess a right response. If we had like a very short shock, COVID was a long shock. So there was not like now more is needed. And so we need more and we need more and there is a larger literature that tells you that again default are costly. And what is important is that you need to act quickly and you don't have to drag. I guess the experience of HIPAA MDRI tell us that dragging and waiting and kicking the can down the road has been extremely costly. And we have to sort of act very fast. And you know, this is I was fast for liquidity, but was not fast enough to sort of now go into that relief and the G20 common frame was not, you know, at the moment is not really working. So I guess at the moment like before this, I guess there is an agreement about 60% 50% of country in that distress. I guess it's irrelevant. It's a large number of countries which are in close to that distress. And so action is needed. There is a lot of shock that are eating those countries. You has been already discussed. I guess strong US dollar especially is going to be a big shock for those countries. So re-profiling your structure is needed. And the common framework clearly is sort of they sort of provide the framework to think about that, but much more is to be done. And so far, it's not been particularly successful. Thank you for doing excellent on time. You let us with two extra minutes actually. So thank you. That was most thought-provoking. I'm sure there will be lots of questions at the end. Next, I will turn to Arjan who will share with us the main findings and policy lessons from the IDRC project on debt challenges in the MENA region. So please go ahead. Thanks very much. You set a very high standard now. Please keep me to time. Thank you so much to the bank and to Wyther for this event. It's a great privilege to be here. Before I start, I just want to say that the International Development Research Centre is part of the Canadian Development Programme. We're not a centre that does research. We're a centre that funds research in developing countries. So the right thing would have been, and Kunal has tried very hard to get this after he won, who is leading this project here to talk about this. So I think economists think second best is okay. I don't think it's anything like that. And I'll prove that to you. The background to this. So this is, I'm talking about the research that we funded. We support that. The background to this was IDRC funded, quite big investment with Southern think tanks in response to COVID like many of the donors did. And in that period where we supported research looking at the COVID policies, and it's been very important in the discussion here already, including in the UNDES report, is how the debt crisis, the debt issues came on top of the challenges that were already faced. Very important how little fiscal space there was for those responses already. And I don't think we've seen a lot of that. Many of those supportive policies were withdrawn within six to 12 months or something. And that was at the same time as the debt crisis was happening. So that was the background to this research. So we're supporting about six country case studies in Africa. And then this regional commission that was led by the Economic Research Forum, and by Isar, who's both a fellow at both those institutions. One of the interesting papers in there, which I definitely recommend, not in this one, but in the case studies in Africa, is work on Nigeria where, for example, looked at how different scenarios on the wits. I'll have to go back to the beginning. I hope that was okay. Different scenarios on the wits that relief could be productively invested. I'll come back to that question later. So very quickly, I'll do the slides very quickly just to make sure I do justice to the fact of the commission rather than pretending it was my work. These were the terms of reference for a commission that looked at six countries in the MENA region. I'll show you the countries in a second that looked at the development part in MENA particularly in the highly indebted one, Egypt, Jordan, Morocco and Tunisia. And they're very different. And Lebanon is an extreme of that. How to avoid financial crisis and recessions and what reforms are needed. And the important thing, if Isar had been here, I think he would have taken us away from a discussion about that because he looks in particularly, and Ibrahim as well, when you look at Sudan and Lebanon, it's a political crisis. It's a fragility here and the debt crisis is just on top of that. And again, I'll come back to that later. It's like the debt crisis. You can't think about it in isolation from the broader development challenge that those countries face. So these are the six countries that the commission. The report is out. I highly recommend reading the report. It's one of the most indebted countries which the report pays attention to are Lebanon and Sudan and of course very different countries as well. And the important message there is even, and Isar was telling me, it's like the MENA region. We don't talk a lot about the MENA region, but it's almost like an example for the rest of the world. Each region is different, but even if you take Lebanon, Sudan and Egypt, they're completely different stories. All three countries need restructuring, but the implications of that in each country is very different. And it's an obvious point, but that's very important. If I get a chance, I'd really love to talk about the IMF donor conditionalities, not in the sense where the conditionalities are good and bad, but how they can support the needed reform. So these are the key messages from the commission. The first one absolutely leads to a financial crisis. I think if you look at Lebanon, it's already there. I don't think there's a question about a coming financial crisis in Lebanon. It's already there. Very importantly, austerity only adjustment leads to a social crisis. In fact, any social piece that exists has induced the financial crisis. If you like, it's financed by Lebanon, of course, is already in a crisis. Sudan has had a part out of fragility with fiscal investment. So the adjustment needs to take account of cutting that will have huge political implications. Yes, the IMF program and that workout are of course very important, but I'm not just saying the IMF and not because you're here. It's the broader restructuring, right? What you're making is like, well, there aren't actually that many of them in the past. It's actually quite important that the debt restructuring, whoever does it, is not sufficient. It needs a national renewal plan incredible enough to ignite growth. There are huge growth potential. Climate, finance, action for climate is really important in that region. Of course, of course, in a very different way, but it needs a modernization of the state. It needs a state that adjusts to the new global issues, including the climate crisis. And finally, economic reforms are deeply, deeply political, and we know that. And then again, I come back to the question. The question also asked to the research team. What are the implications of this? We all know this is the case. They are political. It needs, and I think Shakira was talking about it, need that kind of national dialogue, civil society with that complex of creditors, right? But what does that mean for the international community to how they lead those debt restructuring? And it needs, in the MENA region, it sounds typical, but it isn't. It needs to generate that trust and confidence. How have you done for time so far? With time, so you have four minutes left. The last points then that I want to make, four things. And they're very, like I said, this is the work of that commission. I want to make sure I did justice to that. The four issues that come out for me that I hope are relevant for this debate. One, as everybody said, the threat of the crisis is real. I think it's already there. We should probably stop talking about an imminent crisis. It's already there. Lebanon being the clearest example. Egypt is a clear example as well. Austerity packages. We need to, it's about cutting expender. Austerity packages just won't do because of this social unrest that will follow. The market impacts, of course, as well as social unrest. I wonder why I'm saying this. I think we've just seen this in the UK, haven't we? I mean, the government collapsed exactly on those issues. You can't see this in isolation. So the important thing really to put in the debate is that whichever, that restructuring, whichever international support is given needs to mobilize that internal reform. And that's where I come back to the questions about conditionalities. Conditionalities is a terrible word in many circles. Many civil society hates the conditionalities, but you need to write conditionalities in a way. And even the work at the IMF has very clearly demonstrated how hard it is for the international community to impose those conditionalities. Again, to organize that restructuring in a way that organizes that reform. And within that, and again I come back to, I think Shakira put that very well, is that that needs to be through a broad-based consultation internationally, including with the civil society, because the international civil society continues, rightly to put pressure on those issues, but also the internal dialogue. Of course, it is primarily with the banks, with the government. And in Kenya, we know this as well, civil society, that also plays an important role, needs to be somehow involved in that debate. The private sector needs to be part of that. And then it sounds like the hippie debate in the 2000s, but then it's so different because of the different nature, of the different structure of that. So I think there's a real challenge, and these processes are political, and we really need to bring those into the debate. Thank you very much. Thank you, Arjan. You were also doing very well on time, so thank you. And this is really, we are in the, I'm thinking we are in the same, same, but different world in that the structure of that might be different, but we go back to the basics where we need to have the national ownership of the reform programs to start with, to do any significant reforms. But next, I turn to Maureen. And Maureen will talk about the public debt crisis in sub-Saharan Africa. How large is it, what are its drivers, and why does it matter? So please, Maureen, the floor is yours. Yeah, thank you. I hope to stand for that change. Yeah, so I was asked to talk about the public debt in the context of sub-Saharan Africa. How large is it, and what are the drivers? I think you made my life very easy because some of the issues that we've been talking since about yesterday are quite summarized as well, what I'm going to talk about. However, I'll try to put this in context. And one issue I would like to say is that we've been hearing about the 60% since morning, I think since from the first keynote address. What I'll try to do in this presentation is to try and unpack it and conceptualize it in the context of sub-Saharan African countries. Okay, I don't know why the slides are not working. Okay, there we go. So we were limited to four slides, so I'll try to summarize. So basically, if you look at this chart, what we see is that debt to GDP ratios have been edged up from about 50% just before the pandemic in 2019 to 57.6% in 2020 and 57% in 2021. As you can see, the ratios edged up much faster following the COVID pandemic. And in fact, if you look at these ratios, excluding Nigeria and South Africa, they are much higher at about 61%. Now, one would argue that these are quite minimal numbers compared to what we are seeing in advanced countries. But in the context of these countries, these numbers mean a lot. And I'll come back in a little time. Also, averages can be misleading. So what I try to do is let's see what about... This is based on the regional economic outlook for sub-Saharan Africa, which is very current. It came out this month. So we see that some of the countries which are actually already in debt distress are already having a government debt GDP ratio of over 100. And if you look at these countries, already there are some of them, like as I'll show in the next chart, like Zambia and Mozambique are already actually in debt distress, meaning that they're actually not even able to meet their debt obligations. In this chart, of course, I have excluded South Africa, but I think I heard Amina comment that you are also struggling. The debt GDP ratio is about, I think, 67.7%. And we always want to exclude our big brother because sometimes when you talk about sub-Saharan Africa, these countries can be quite heterogeneous. So here I've just presented the debt GDP ratios. And in the next chart what you see is that the point we've been talking about is this increased debt vulnerabilities. And as you can see from this chart, more and more countries are facing risk of debt distress. And I think a lot here, what I put in this chart is specifically sub-Saharan African countries. But of course we have already other countries which are already in debt distress like Sudan. Sudan is here, Somalia is here, but since those ones don't fall in sub-Saharan African countries, I excluded them. So one point is if you look at the DSS, these are the countries that the IMF, they are covered by the IMF World Bank DSA analysis, that is Debt Sustainability Framework Analysis of the IMF and World Bank. They cover 35 countries. And out of these 35 countries, these are 35 out of 45 sub-Saharan African countries. The DSS are publicly available for 34 countries except I think Eritrea. And I just took the DSS just before the pandemic and that was 2019. And the DSS as of last month in September. And what you see is there is this quick transition if, for example, if you take countries like, sorry, if you take countries like Kenya, Malawi, just before the pandemic, the debt distress was being rated as just being moderate. But they quickly transitioned and graduated to high risk. Now if you look at the countries that are in low risk, just before the pandemic in 2019, we had Madagascar, Rwanda, Senegal, Tanzania, Uganda. In fact, Tanzania has always been regarded as this low risk debt distress, low risk of distress for quite a long while. But all of a sudden they have graduated to moderate. And I think what would be deceiving here is to have maybe some discomfort that if you are in moderate, you are comfortable because as you see, the transition from graduating from moderate to high risk category can be very fast depending on the circumstances and especially given the vulnerabilities. So which countries do we now have in low risk? Basically we are not left with any. I think Eritrea, we don't know where to place it because its DSA is not publicly available. But if you look at the sub-Saharan African countries, you are basically saying that virtually all the 35 countries that are covered by the DSA are facing some form of risk of debt distress risk. Be it moderate, be it high, or actually in actual debt distress. And if you take these countries out of the total 45 countries, then these countries make three quarters. So basically about 76 percent. And if you take countries that are in debt distress and they are at high risk of debt distress, they constitute 40 percent of the 45 countries in sub-Saharan Africa. So that tells you just how vulnerable the entire continent or this region is facing. And if you, of course, combine this with the other countries in the northern Mena region. So I think the presentation that we just had by my colleagues talked about and also what we've been hearing since morning is the composition of the debt and how this has changed. And what this has, the point that I wanted to make is I think what was made by the panelists before we, our panel, that's the cost of servicing that has really gone up. And just to show, I just took this as an example from Kenya's case. So if you look at the increased costs of this servicing associated with the increase in the private and commercial debt. So you see that almost 68 percent of the interest payments are going to bilateral commercial debt. And only small proportions, of course, go to the multilateral. So what that shows is whereas the composition of commercial debt has gone up almost to about a third, then it comes with the high costs of servicing. And so how did we get here? Or how did these countries get where they are right now? There have been quite some factors that have been developing over time. And as I said, how many minutes do I have? Okay. So I'll try to summarize this. And the key drivers of this public debt that we are seeing has been increased investments, demand for infrastructure development. If you look at most of these countries, either they are like my own country. We have had the standard gauge railway. Most of these countries have had this massive investment in infrastructure. We have the roads, the energy. And this is where the China factor comes in. Most of these have been through large scale financing from Chinese loans. And that's what has taken us where we are. And then there was also this increased ability to borrow following the improved macroeconomic management and strong economic performance, particularly since the 2000s. And also the HIPIC debt relief. What this did especially for the HIPIC countries was to provide an ample space for borrowing because it substantially lowered their public debt burden. But what that done is that when they went to this borrowing spree, they have entered up again like in those prices where they almost found themselves before. And then we had come the financial crisis and we had these favorable global financing conditions when the advanced countries starting of course with the US lowered their interest rates almost to zero or zero. And then there were also favorable ratings following the favorable economic growth that was going on if you recall that time we had the Africa rising narrative. So most of these countries took advantage of the favorable interest rates to go and to the international markets and issue sovereign bonds. And then before we know what's happening, I think it's been said that just before the pandemic already these countries' debts were already going up. But we all know that we had this adverse impact of the COVID pandemic which had two double effects on revenues because of the lockdown measures and all this. And also the growth that most countries recorded negative growth rates. And these had really severe impact on them. And then what we are seeing is a U-turn. Remember I talked about the favorable financial conditions. But now what you are seeing with the increases interest rate hikes in the advanced economies, the interest rates in the international markets have gone up. My own country last month wanted to issue a sovereign bond but could not because of these high rates. So we are seeing a situation where countries are actually now being kept out again. And also facing high rollover costs because most of these bonds are actually approaching maturity. There are some that are going to mature in the near future. And we expect even these costs of servicing to go high. So we see a situation where countries are even borrowing to again finance or to pay debts. So it becomes like a vicious circle. I think Ambrisk's presentation, you talked about this high dependency on commodities. We've been hearing about this. And this makes this country very vulnerable also to the exchange rate shocks. As we speak, we know that the dollar has been strengthening. So the debt, most of these countries have seen their currencies depreciate. Over 50% of their foreign debts are in U.S. dominated. So what this means that the cost of their debt goes up even without doing anything much. And then of course there's these issues of maturity mismatches because most of these countries that have borrowed even to finance this infrastructure development, we know this comes with a lag when it comes to revenue generation and we don't see that. So you're borrowing short term and your revenue streams are in domestic currents and they have long gestations before you get the fruits of it. And then you have these loans that you have to pay back or service quite quickly. So because of that you have to again borrow because your revenues are not matching what you borrowed. Then you have this fragility, fragile countries which characterized with civil strife and fragility of some of these economies. Thank you. Thank you very much. I hope I've not taken it. Yes. Now your insights bring us directly to the questions and answers session. And actually I would like to start out while others might still contemplate their questions. I might wish to start with one myself and you can choose if you want to respond. So my question is what do you think needs to be done to improve future debt restructuring processes and how do you see the role of the private sector in this? So if anyone would like to comment, silence. No, I can start. I guess it's probably the harshest question but also the one that I guess everybody was expecting. I don't know. I think it's very complicated and to some extent the fact that the common framework started like a year and a half ago and we have three countries which sort of apply to that and they are going through that very slowly for I guess in part like domestic condition and in part like really issue to create a coordination. So I guess in the session before, something has been mentioned. There's a lot of discussion on how one can bring creators to the table and I guess on that I guess the role sort of as we mentioned before like civil society and a lot of pressure from bilaterals and multilaterals is incredibly important I think. And so my take on that and again I should have said at the very beginning this is my own personal view. It doesn't reflect the view of the institution now is that I thought like when COVID came we knew that there was a lot of problems and I guess she's made a very good point in saying that many of the many accounts especially in Africa issue sovereign bonds and this was very risky and exciting. We know that there are this incredible ballot repayment coming due 2023-2024. This is all known before COVID. So we knew that this trend was very high. I was working in Senegal and Senegal was performing very well, it's growing very fast but still like that service is an issue exactly because of sovereign bonds and it's not like I'm Italian so we know about that problems but if you are Italy like you issue a lot and you're a lover it's not an issue you don't care, keep on lowering as long as the management office works it's one thing. If you have like two bonds outstanding rolling over that is a big issue because if liquidity goes down that's what's happening. Like with now it's not there can is not able to issue in the market Senegal yes but who knows in a year time. So that was a risky example that we knew COVID came and to me like for the HIPPIC we went to that relief with a lot of time and with a lot of push like from everyone from the pop to bono and to some extent I don't know if it's good or bad but we ended up in providing that relief okay. Now it seems to me that the political case is easier because with HIPPIC you know you can have a lot of counterarguments say you know those countries did mistakes and they overborrowed and I don't want to take steps but you know you can have good arguments on both cases. Now it's really pure exogenous shocks. So I guess politically there should be much more sort of unity in sort of providing sort of you know that relief or the profiling and so on. I guess that there is a lot of scope to do that and that kind of disappointing that it's taking so long and my point is the presentation is that it's very costly to wait and sort of the cost of waiting it's increasing over time and it's now two years. Thank you very much. So I'll start from where you just ended. I think what's been challenging in this case compared to what we saw with the HIPPIC issue is that this multiplicity of the creditors. So the question is for example the commercial debt how do you then approach them and how do you be able to bring them on table so that you're not only talking about the Paris Club members or as it was before. And I think for me what is needed is the international coordination of this and I think that if we had more of that coordination it's easier to I mean approach it holistically and put so we have both domestic where we are involving the civil societies and the private sector but internationally we must see that coordination coming in quite strongly for this to happen because if we don't have that then we are seeing a situation where like every country just left to fight for itself and I mean God for us all kind of approach and the other thing is yesterday there was a question that was asked like why are some of this country sharing away for example for approaching the the G20 common framework for structuring. I mean it's also this stigma that comes with it because you go for the debt restructuring you given bad ratings and then it's all kind of makes your situation even look more gloomy and then you know everybody then shans away from you and so I don't know like that issue of how we need to give these countries and that's why we need this coordinated international response so that you are not like like almost feeling isolated or humiliated that you are going for this you know because sometimes it looks like okay if countries go for debt restructuring then there are credit ratings it means like they are doing so awful that now there nobody wants to hear about them and in fact what has happened even for those countries that have gone there what happens is that their interest is spread I mean it goes just highway I mean because I mean it means like so what you are doing you are actually doing more damage to these countries so we need to manage that in a way that can give confidence Thank you Maureen and Aryan would you add something yes yes and when I I agree that the two previous speakers my concept is yes but there is such a big and I was trained to say historian I almost feel like we should absolutely stop talking about HIPPIC the world is so different now that the lessons from that apart from it's costly to delay that's absolutely critical question it is just the situation is too different we need we need that international coordinated response but it's not the same as it used to be the fact that there is debt restructuring are not happening is perhaps because there isn't an international commitment but I don't think that's where the problem lies it is because countries are pushing back it's like the way that the debt restructuring is presented does not fulfill their need. Ethiopia I heard that one of the reasons we are in Ethiopia is like I read the IMF statement on Ethiopia back in June the infrastructure will come and the IMF team was in town again it's like it's not coming why we don't 100% know and that's why we need to figure this out within that I do want to bring in a very important differentiation because there is a lot of in marine slide as well the private sector isn't that important in all countries in many of the countries you have the previous situation if you like if you take Sudan for example I think Sudan that's all multilateral debt still and in many of the countries you list there as well so there you have a situation where the international coordination does work but in the others it doesn't countries are putting back and bringing the private sector into the picture is absolutely critical both at the international level but also then that also needs to and that's where the hippie kind of discussion just are not suited for this situation and to build that national ownership civil society is important but there at that level too this private sector needs to be brought in much more strongly than we've ever seen thank you so let's move on to questions from the audience I think I saw Iqa here first thank you very fascinating interventions all three I have a comment and a question first to Andrea I'm not surprised that the Chinese lending appears to be pro-secular supposedly I mean Chinese development banks lending to big infrastructure projects which often go to Chinese contractors and they sort of almost by definition they create growth and then actually continue on this I have a question to Maureen on now that the Chinese banks and some other companies are big lenders in sub-Saharan Africa as well and he mentioned that some countries are now in even greater difficulties in servicing their debt do you have any sense of what is the approach of China and Chinese actors in this when if countries need to reschedule their payments and so on that would be interesting to hear thanks I suggest we take the questions so that we don't forget what we had as the first so please go ahead who wants to start ok so we had the DSSI the debt suspension initiative which we did have a chance to restructure the Chinese loans as well I mean debt servicing as well but that is how far it went and I think there has been all these views about whether DSSI was effective it was not effective but I think as Andrea mentioned it was supposed to be short term it served its purpose to be short term but what has happened is that it's like denying maybe someone postponing the payments but when they accumulate you still have to pay them and I think that's where now challenge comes and this where most these countries are so there was that limited breathing space but we are seeing now situation where they have to pay either way and that's where now the restructuring comes in it's been a bit I mean this is where we say that as he says it's quite different because then it would much easier if we were talking about like it's like more of every country on its own because then every country if you have to have a negotiation with the with the creditor in this case the big creditor being China and I think every case is like being handled in its own merit so you we are hoping that we can see more of this happening but it's still challenging at the moment Andra you wanted to add something I think she answered already like I guess the issue on I know there are case studies in different countries I guess it makes a big difference like in a relative way that China or the emerging donors have in the country so if exactly there's a point I was making about seniority like if it's such a big lender and it's sort of behave like senior then you have two senior countries and then the MF cannot land in early years so it's complicated if it's a tiny it's a bit of a problem but I guess now it's more the discussion is mostly on interest not on NPV reduction which I guess that's what hold the common framework Okay thank you and the first question came from Ika Goran at Bank of Finland please next speakers introduce yourself because we might have someone online who was not with us yesterday I think next I had Hi I'm Ugo Panitza from the Geneva Graduate Institute so I I don't know a comment slash question and an anecdote let me start with the anecdote so now this too little too late is you know the fund says it so it was actually an official policy document of the fund so not even it's Andrea is leading the fund position the anecdote is that for saying this in 2006 I almost got fired so things so I was called in the office of the president of the Inter-American Development Bank and they told me you cannot write this stuff it's irresponsible and blah blah blah so things have changed a lot so which is good but we still don't understand why this defaults came come too little and too late and that's that's my comment slash question that is like a big area for research which is massive but it's important because like Andrea said like everybody said this amplified the cost of this event thank you Ugo anyone like to reflect directly on this why do we have too little too late why we still have too little too late maybe like one one way of thinking is that apart from the anecdote that I hope it's like orthogonal to me but no I think the first thing I think I would notice like sort of to move away from a very negative view to a more positive view that things really changed a lot in 15 years I guess like the attitude especially from multilateral is way different than it used to be but on the too little too late thinking more as a research than from a policy perspective I think there is a lot of role for research here to push like if you go back again to the sort of the Krugman papers and the old papers you know we know that in economic terms it makes sense under certain conditions from creators and debtors to provide that relief there is this very solid economic argument which apparently is not pushed that much and so I guess that should be the argument that people should push and I don't see that and people should go back and read like the old sort of the Krugman and the Saxon and the other paper at the time there's a lot of literature on that in the 80s and I guess maybe more is needed now and the other one if I can add to what she said about the stigma thing like for instance in our DSSI paper we were really motivated by that and by the fact that credit rating agency were saying oh yeah if you apply for DSSI you're going to be destroyed in reality no there was no stigma attached to that and sort of an anecdote in the slides we start with a quotation from a minister of finance in sub-Saharan Africa I'm not sure it's Kenya it could be and then saying that oh yeah we're not going to apply because there is stigma attached to that it's going to be costly and then after our paper but you know it's uncorrelated to that but still it's there then they say oh yes we're going to apply and in fact there is no stigma and so one can provide the research and try to sort of show that it's going to be the case and even for the common framework if it starts in a certain way and there is a sort of agreement then stigma goes down stigma is endogenous there is stigma because it's not working the moment it works stigma goes out I want to underline that it's the end of this session too little too late I think I'm not going to leave this meeting with that conclusion because it's not the right thing to be negative there are problems that the international community has to contribute to and also I don't think it's actually accurate everybody has been commenting on this ARC in Nairobi has been there's a publication three years ago and then Covid came so I don't think there's a terrible slow response I think the important thing and the stigma is really important in this is to really think how the international community in support has has changed you heard me probably muttering when China was mentioned like we just have to get used that that's how the world has changed that it isn't the same as it was and that what the international community what IMF does they now have to as they do as the governments will do will take account of the actions they have with the IMF who have impact on accrediting impact on all sorts of other things we have to work with an entire community so I think realising that the old owner community is less and less important that is happening very gradually and I think much too much too slowly we should be much more upfront and clear about that and reflect that in our international debates but let's not come to the conclusions like oh we didn't respond to this crisis I think it's time thanks a lot I still have at least Shakira, Tony and Sanjay so please Shakira just a comment and a question I'm sorry please introduce yourself to the Shakira Mustafa I'm a researcher at ODI one of the things we've looked at quite in depth is Chinese debt restructuring process and I think people really underestimate how fragmented a lender China is so it's just one person who's making the decision but this is how we're going to treat all debts so zero interest loans have a higher probability of being cancelled and the more commercial the loan is the less scope there is for debt relief and I think the previous panel yesterday someone mentioned it's your personal liability if it's your loan in that Chinese agency that's problematic and it's cancelled that has reputational effects for you and your career and that personal liability element is some people from the outside don't really take into account so that's that comment and please check ODI if you want to learn more about the Chinese restructuring process the second question I had given the reputational effects of things like the DSSI, the common framework we know there's a lot of focus in using contractual clauses to facilitate debt restructuring and temporary relief, specifically things like natural disaster clause if a country has a certain shock that's defined in the contract that service payments will be suspended for one or two years that's an idea that's been around for a very long time and hasn't really taken off for a variety of reasons the most recent IMF publication seems to say it only is feasible for small island development states facing large exogenous shocks so my question for Andrea is really like what's your opinion on these state contingent clauses and if you're a fan of it what do you think the rule of the IMF would be thank you thank you so straight to Andrea yeah very quickly on the first phase on the first comment on China yeah it's true it's very complicated and it's also true that there is initial transparency that it's both on the lender and on the borrower as well so if you are like then a multilateral really some countries we don't have a clue of where they're borrowing from and for some specific bond it's difficult to have information and you know the fact that you look at a lot of researchers coming up with data on exposure stock of extended versus China and you get very different numbers and people like scraping website and whatever and to me like it's so something I guess Anna Gilbert made the point that you know this is basically obligation we have versus your citizen and so there should be the massive transparency and I guess that's a big issue which is not really addressed on the state contingent I guess not surprisingly if you're similar to what Hugo said yesterday that to me like it's a big puzzle in the sense that some of these instruments seems to be like very lowing in fruit and they're not there I understand the counter argument that you know there could be a lot of manipulation especially in some countries it goes again into the transparency quality of data and so you can play around with a lot of stuff but for instance I was discussing and that goes again similar to a point that she raised about like for instance like the strength of the dollar and the currency mismatch and a lot of that comes with sort of devaluation of local currency and so that built up one issue could be that you can edge currencies issuing like exante instrument and there could be effort from the I know that there is a lot of ongoing discussion in the multilateral community to develop instrument that sort of through which country can issue and then immediately edge and that would be like a similar way of doing something we choose try to solve the problem exante and for instance like why it's very easy sort of to tweak GDP data to sort of get around sort of state contingent debt related to GDP but you know it on because it's not observable like exchange rate are observable daily and so if you think that's something going on you can you know reprise and so I guess that's maybe an area in which the market can work better thank you we are soon running overtime but I suggest we still take Tony and Sanjay if nobody objects so there you go Tony Anderson from Copenhagen University and you knew wider so we know that when you're designing an adjustment or a stabilization program if you have that generous external assistance including debt relief then that really helps you mitigate the social and economic costs as Andrea pointed out simply because you'll have more fiscal space and more opportunities to put in social protection and other good things but what if we don't really have that generous external assistance in other words if we don't really have that effective international response which people are calling for so here I'm being rather cynical about the reactions of the international community because you know quite a lot of the aid effort now is basically pro cyclical not just China you look at say United Kingdom where aid has basically become pro cyclical in my view so what the question for the panel is then the absence of really the effective international responses that we've all been talking about in this meeting what do you advise the minister of finance or the central bank governor or the policy makers in general to do that's not an easy one but why don't we start now from Aryan would you like to comment before lunch or after we can continue over the lunch of course just because we're running into lunch that's too much but absolutely think about how the world has changed I mean if there's one thing I would be critical of would be the president of the World Bank back in May suddenly was so surprised when he discovered how much China's lending there was and how little this was known Dave Adolar in 2007 in Beijing would have told you that I haven't seen the ODI but that's exactly the kind of stuff we need to incorporate like yes it is different you don't you don't have the impact that Bono had in 2000 so you won't have that international response but much more importantly that entire story is so far less important we've got to live with that new reality is like that graph mind boggling how little debt restructuring there has been the official ones the old multilateral world doesn't matter it's far less important so that's the new reality again it's very different in different countries there's a couple of countries where there hasn't been that prosthetical investments a bit more of the old world I think that's still very workable there but in the new one don't rely on the stuff we did 20 years ago thank you Maureen would you like to go next? so now that I work in central bank maybe I'm going to be advised but but on the most what countries are doing is to do of course now I talk in the case of my own country to do the physical consolidation and of course this comes with the cost so the social cost cannot be avoided so somehow you must feel it because we are having a situation where your physical space is limited and so you have to kind of see try to do the best you can within your limited space and that cost actually already we are working towards that and that comes as I said comes with some painful because how do you then in these economies and like advanced economies where we have for example the social protection schemes unfortunately in our case we have this large informal sector and most people just survive hand to mouth so you also even when the government wants to for example provide the social protection or safety needs is limited I'll give you an example with this current inflation and we for example we've been having and fuel prices going up and we used to have we have had a situation where to at least provide some cushion the vulnerable groups the government has been trying to provide some fuel subsidy but as we speak it's come to a situation where I think the government has realized this is not sustainable especially in the current circumstances so somehow of course the you have to devise a way in such a way that you now prioritize your expenditures try to prioritize expenditures where more would benefit where you think that at least you can be able to safeguard not so much to a larger scale but at least where you can be able to make sure that the social spending is not so much adversely affected consolidation also means that perhaps some of these development expenditures the big whatever's may have to slow down and this is some of the cost that these countries have to live with having said that outside that African countries are very resilient and Africans are very resilient they are very hardworking people if you look at how these economies have emerged from the pandemic without much of the kind of social protection and support that we saw in advanced economies 2021 on our sub-saharan African countries grew by 7.4 percent I think best to an IMF report that has just been released my own country they just had a growth rate of 7.5 percent and if you look at where they are coming from I mean it was the situation was quite there not so much support so on a positive note these economies are quite resilient and thanks to the hardworking spirit or where you have to wake up and find where you are going and put bread on the table the following day I think that we still emerge out of it stronger thank you Maureen that's such a positive note I'd still like to give it to Andrea and Sanjay so I made this a time I think she said way better than I should have said but I think Tony's question it's very good in a sense it brings us back to the basics and to some extent contradicting myself before it's true that the environment is such that I really don't see a positive shock I just see a lot of negative shocks and including foreign aid for political reasons why advanced economies should increase budget for foreign aid there will never be political support domestically and therefore that exactly leads to fiscal consolidation and I guess in that report I guess there is some sort of calculation of how much country should consolidate to bring that to 70% or for the other to stabilize that and I guess that's I think where we should go and ongoing work we've been doing is exactly sort of which are the best way to consolidate and sort of a little bit like on the fiscal side and mostly like through grow like the experience tell us the only way to reduce that is through grow and African being more resilient and similar you know it's true that the African narrative is the old now but still countries are growing and some of them especially is also West Africa so I guess that's where sort of that civilization can come okay thanks a lot and the final word from Sanjay please my questions would be very short and it's directed to Andrea two small questions first is that you kind of mention Krugman's some of the excellent papers in the 80s but I remember kind of her again from the memory so it could be wrong that is one of the main assertions of Krugman was that there are in a lots of private debt restructuring like you know debt buy backs or debt equity swaps okay now you can all replicate it by a simple debt forgiveness okay so that like if the IMF or one central body just confine gauges very simple principle then it could be all replicated so my first question is that it has been almost 30-40 years since Krugman's paper so and there have been lots of private you know debt restructuring mechanisms have been kind of floated so do you think in the hindsight Krugman was right that is there's not much of you know there's a lots of you know I mean builds and jingles about that private debt restructuring but actually a simple mechanism would have been better that's the number one and number two question is that like you know I know that is a complicated you mentioned it number of times that is a China's role as a kind of a senior kind of a creditor now so if I understand that it is almost kind of equivalent to a bank debt right because there are multiple creditors bank it would be always the senior so when it comes to the restructuring so the senior actually kind of a he once he or she kind of gets the money he leaves the scene so it doesn't have much of an incentive to restructure debt so is it that kind of a complications that we are referring to that is China is taking all his all their dues and leaving the scene and having the debt restructuring process in incomplete and messy situation these two questions thank you and over to Andrea quickly like maybe we can talk more over lunch but I guess the issue on China and seniority could simply be that in the end if you want China to participate meaning that being less senior and take the hit then for instance one way of thinking about that could be like also thinking about the governance or international institutions more generally so if you want China to participate and so and then you want also then it should be reflected in so how much weight they have in the institution so there is an issue of equity here that could be sort of to make I think that complicates the issue and on that relief and how complicated it is and if it can be replicated I don't know like one first reaction is that you know after he pick it was like you know we provide common reduction to everybody and institution be criticized because you know we have to tailor things to country needs and now it's tailored to country needs country by country but then we know that if you go country by country it's very complicated because you know Kenya is to negotiate with some people and some others to negotiate with some other people so I don't know like going into something more common and sort of homogeneous we are not in that situation we can afford to do that so that that's by construction more complex thank you Andrea I'd like to end on a positive note of friendship positive view on growth resilience and so forth and we'll continue from here thank you very glad that you said that