“Despite widespread recognition that the Common Framework needs reforming, there is no consensus on how to actually reform it”
informally and, under the Chatham House rule, talk freely about how to improve the process.
REFORMING THE IMF FOR A CHANGING ERA
Another issue of interest to Africa but on which there has been no G20 action is reform of the IMF. The IMF is effec- tively, but controversially, the lender of last resort to Africa. Unlike the multilat- eral development banks, its governance arrangements and operational policies and practices have not received signifi- cant G20 attention in many years. This is unfortunate because the IMF’s institu- tional arrangements and practices need updating to make it fit for purpose in the current era. South Africa has succeeded in raising the profile of these issues, but its G20 pres- idency is likely to end without agreement on how to address them. It is possible that South Africa may still be able to promote an effective G20 response to them. It has taken action ‘in the shadow’ of the G20 to promote more attention to these issues. South African president Cyril Ramaphosa has appointed an African Expert Panel, chaired by former finance minister Trevor Manuel, to advise him on these issues. The panel is expected to submit a report to the pres- ident in advance of the G20 summit. There are several things the panel could do to help keep attention on these issues. For example, it could recommend that President Ramaphosa appoint a techni- cal committee to study the barriers and challenges that Africa faces in accessing stable and affordable flows of develop- ment finance and to report back in 2026 on its findings with recommendations for corrective action. It could also make pro- posals regarding an IMF reform process. This report could then be used to advo- cate for such changes with G20 members and in other international forums such as the African Union, the G7, the United Nations, the G24 and the World Bank– IMF Development Committee.
FACING THE DEBT CHALLENGE The treatment of African sovereign debt- ors in distress or default is another aspect of this challenge that is in urgent need of reform. Four African countries – Chad, Ethiopia, Ghana and Zambia – have received debt restructuring treatment under the G20’s Common Framework. Their experiences, while different, have demonstrated that there are substantial problems with the framework. The fact that it deals with different creditor groups sequentially complicates inter-creditor relations to the detriment of the debtor. In addition, the process is handicapped by the lack of universal agreement on the definition of comparability of treatment for creditors and on how the IMF should deal with environmental and social issues in its debt sustainability analysis. The result is that the process is unduly slow, unpredictable and characterised by a structural bias in favour of creditors. Despite widespread recognition that the Common Framework needs reform- ing, there is no consensus on how to actually reform it. The Global Sovereign Debt Roundtable, co-chaired by the IMF, the World Bank and the current G20 chair (in this case South Africa), has not been used effectively for this purpose. This is unfortunate because the roundtable is the only place where all stakeholders in the debt restructuring process can meet
// DANIEL BRADLOW Daniel Bradlow is a professor and senior research fellow at the Centre for Advancement of Scholarship at the University of Pretoria. He is also a senior G20 adviser at the South African Institute of International Affairs, senior non-resident fellow at the Global Development Policy Center of Boston University and professor emeritus at the American University Washing- ton College of Law. His recent publications include The Law of International Financial Insti- tutions and ‘A New Conceptual Framework for African Sover- eign Debt: Finding an Optimal Outcome that Addresses 5 Chal- lenges’ in the Journal of African Economics Supplement .
X-TWITTER @dannybradlow
147 globalgovernanceproject.org
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