Key Takeaways
- Nearly half of IMF-eligible countries are in debt distress or at high risk.
- Interest payments have quadrupled since 2013, straining public finances.
- Transparency International urges more transparency and stronger anti-corruption measures.
Nearly half of the countries eligible for concessional financing from the International Monetary Fund (IMF) are either in debt distress or at high risk of it, according to a report by Transparency International (TI).
The report, released ahead of the IMF and World Bank Annual Meetings in Bangkok, highlights that interest payments have quadrupled since 2013, significantly impacting public finances in low- and middle-income countries.
In Africa, 57% of the population lives in countries where interest payments exceed spending on health, education, and climate action, according to the report.
The figures underscore the difficult choices governments face as they strive to finance essential public services while meeting obligations to creditors.
Without robust safeguards and effective controls, sovereign loans are often misused and embezzled, enriching public officials and their cronies at the expense of future generations, the report states.
TI argues that the problem is not merely the amount of debt but also the terms under which loans are negotiated, the disclosure of financial agreements, and the use of borrowed funds.
The report highlights that opaque agreements and weak oversight make it challenging for citizens, parliaments, and independent watchdogs to determine who approved a loan, how much a country owes, and whether borrowed funds were used for their intended purposes.
The Bangkok meetings offer an opportunity to turn concerns about debt transparency and corruption into concrete policy commitments, according to TI.
The G20 finance ministers and central bank governors will also meet on October 15, providing governments with an opportunity to establish political priorities on debt transparency and accountability.
Transparency International identifies several steps it wants these institutions to take, including ending secrecy surrounding sovereign borrowing and requiring bilateral creditors and private lenders to disclose complete, transaction-level financial and non-financial information about public debt.
