On Friday, the International Monetary Fund, the World Bank and India will host a meeting of international creditors, including China, to discuss the gaps in the restructuring process for countries with unsustainable debt.

According to financial news agency Bloomberg, Friday's virtual meeting will be attended by Ghana, Ethiopia and Zambia, countries that have a level of debt considered unsustainable in the face of economic growth forecasts and the ability to service public debt, which has increased for many countries in the wake of the covid-19 pandemic and Russia's invasion of Ukraine.

On the creditors' side, there will be representatives from the United States, the United Kingdom and Japan, as well as institutional players such as the International Finance Institute, the global association representing the financial industry and private creditors.

According to Bloomberg and quoted by Lusa, the meeting will also be attended by Sri Lanka, Ecuador and Suriname, countries that also have a debt considered excessive according to IMF and World Bank criteria, which include indicators such as the debt to GDP ratio or the relationship between the value of the debt and tax revenue.

The Paris Club, a group of Western creditor nations, joined China, India and Saudi Arabia, with the impetus of the IMF and the World Bank, in April 2020, to agree on a roadmap, known as the Debt Service Suspension Initiative (DSSI), which would suspend debt payments for countries in greater difficulty due to the effects of the pandemic.

Faced with criticism over the lack of participation by private creditors, which in practice meant that debt servicing continued to be paid despite the countries' financial difficulties, the creditor countries defended the need to involve the private sector in the negotiation, in a model known as the Common Framework beyond ISDS.

Countries' resistance to joining this model is explained by the fact that joining would lead to an immediate downgrade in the ratings assigned by financial rating agencies, which would make access to the financial market more expensive and difficult, precisely at the time when countries needed funding the most.

So far, only four countries have opened a formal restructuring process: Chad, Zambia, Ethiopia and Ghana, although analysts believe that more countries will need to restructure their public debt.

The meeting, according to Bloomberg, will also focus on ensuring comparability of treatment between private and official creditors and resolving technical and legal problems which, in practice, have made it impossible for the process to move forward, leaving countries with the burden of having joined a debt restructuring process, but without the benefits of restructuring.

China, which has been widely criticized for the opacity of its loans, argues that the IMF and the World Bank should also suffer losses on loans, but the two institutions have rejected this idea, arguing that it is impossible given the operating model in which they operate, which provides for full repayment of loan amounts as a way of guaranteeing the ability to make concessional loans.

The meeting comes on the eve of next week's G20 finance ministers' meeting in Bangalore, India.

In December, the financial rating agency Fitch Ratings warned that the 19 countries it analyzes in sub-Saharan Africa will have to pay 22.3 billion dollars in debt, representing 65% of GDP.

"Total external debt payments in 2023 in the countries covered by Fitch Ratings will reach 22.3 billion dollars, up from 21.4 billion dollars in 2022," reads the report sent to investors.

"We forecast average public debt in sub-Saharan Africa to improve to less than 65% in 2023, after peaking at 72% in 2020, helped by economic recoveries following the pandemic, higher commodity prices and efforts to reduce budget deficits, but this compares with an average of 57% in 2019, before the pandemic, and less than 30% between 2007 and 2013," the analysts point out.

According to an analysis of public debt in the 19 sub-Saharan African countries covered by this financial rating agency owned by the same owners of the consultancy Fitch Solutions, almost half of the countries (42%) to which Fitch assigns a rating in the region "have a debt-to-GDP ratio above 70%, while the average debt-to-revenue ratio will remain above 300%, double the value in 2013", proving the deterioration of the economic fundamentals of the countries in the region.

In the note, the analysts warn of the deteriorating outlook for these economies, listing the risks emerging from the significant global slowdown, high inflation and difficult financial conditions, as well as the general weakening of economies due to the effects of the pandemic, first, and the invasion of Ukraine by Russia, more recently.