China has agreed to “a major breakthrough” that could help overcome a long-standing impasse on debt relief for some of the world’s lowest-income countries at a time of global economic slowdown, a senior International Monetary Fund official told Devex.
In exchange for China stepping back from its demands that multilateral development banks suffer losses as part of debt restructuring for the lowest-income countries, the World Bank will use its International Development Association fund for the poorest nations to offer more concessional lending and even grants to the indebted nations.
The decision was reached Wednesday as part of the Global Sovereign Debt Roundtable, which brought together debtor nations and their creditors to try to improve the debt restructuring process. The talks have been a centerpiece of the World Bank-IMF Spring Meetings this week in Washington, D.C.