TI warns of debt risks for nearly half of countries — Dawn

Nearly half of the countries eligible for concessional financing from the International Monetary Fund are already in debt crisis or face a high risk of one, while their interest payments have quadrupled since 2013, Dawn reports, citing a Transparency International report.

Pressure on public finances

According to the anti-corruption organization, countries with low and middle incomes allocate at least 8% of government revenue to debt servicing. In Africa, 57% of the population lives in countries where debt interest payments exceed spending on healthcare, education, and climate action.

Transparency International notes that the problem is not limited to the volume of borrowing. The terms under which loan agreements are concluded, the disclosure of financial information, and the use of borrowed funds are also important. According to the organization, opaque arrangements and weak oversight can make it harder for citizens, parliaments, and independent oversight bodies to verify who approved a loan, the size of the debt, and whether the funds were used for their intended purpose.

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Transparency International’s proposals

The report was released ahead of the annual meetings of the IMF and the World Bank, which are to take place in Bangkok from October 12 to 18. Transparency International called on governments and international lenders to increase the transparency of public borrowing, strengthen safeguards against corruption, and give borrowing countries more influence over decisions that determine their debt obligations.

The organization also called on G20 countries to require bilateral and private creditors in their jurisdictions to disclose full financial and non-financial information on public debt at the level of individual transactions. In Transparency International’s view, the G20, together with the IMF and the World Bank, should develop common standards to limit confidentiality clauses in sovereign loan agreements.