Washington: The International Monetary Fund (IMF) has confirmed that the United States and China despite their ongoing geopolitical and trade tensions remain steadfast in their commitment to global debt resolution initiatives. According to Ceyla Pazarbasioglu, the IMF’s Strategy, Policy, and Review Department Director, both nations are actively participating in the Global Sovereign Debt Roundtable, signaling their continued cooperation in tackling the mounting debt distress faced by developing economies.
Speaking during the IMF and World Bank Annual Meetings, Pazarbasioglu emphasized that the sustained engagement of the world’s two largest economies in the debt roundtable demonstrates a shared responsibility toward international financial stability. She highlighted that while U.S.–China relations have been strained on multiple fronts from trade disputes to technology and security both nations acknowledge that sovereign debt challenges in low-income and emerging markets pose a global threat that demands multilateral collaboration.
The Global Sovereign Debt Roundtable, launched in 2023, has emerged as a vital forum for improving communication and coordination between debtor nations, official creditors, and private lenders. The IMF official noted that significant progress has been made in streamlining debt restructuring procedures and enhancing dialogue among stakeholders.
However, she cautioned that much of the progress has been limited to bonded debt, which benefits from legal frameworks such as collective action clauses. In contrast, non-bonded debt which includes bilateral loans, commercial bank credit, and other opaque financial arrangements remains an area of concern due to its lack of transparency and clear restructuring mechanisms.
Pazarbasioglu pointed out that many struggling economies continue to suffer under the weight of unaccounted or undisclosed debts that are not easily captured in public statistics. Such debts, often owed to private lenders or state-owned banks, complicate negotiations and delay the recovery process.
Countries like Zambia, Ghana, Sri Lanka, and Suriname, which have all undergone debt restructuring in recent years, continue to face difficulties in resolving non-bonded obligations. These lingering financial burdens hinder their ability to restore credit ratings and re-enter global financial markets, even after official restructuring deals are concluded.
The IMF strategy chief underscored the urgent need for transparency in sovereign debt reporting. She argued that only by fully disclosing all liabilities public and private can debtor nations build trust with creditors and secure sustainable debt treatment. “Without transparency,” she said, “we cannot ensure fairness or speed in restructuring efforts.”
Her view was echoed by financial experts, including former banking executive José Viñals, who described the opacity of non-bonded loans as one of the most serious structural barriers to efficient debt resolution.
The IMF report highlighted that although the global debt-to-GDP ratio has stabilized after years of pandemic-induced borrowing, many low-income countries remain heavily burdened by interest payments. Rising global interest rates have made access to credit even harder, forcing several nations to turn to bilateral or unconventional lending channels.
The IMF and World Bank meetings this week are expected to include further discussions on improving the G20 Common Framework for Debt Treatment, introduced in the aftermath of the COVID-19 crisis to support distressed economies.
As the world faces simultaneous challenges of inflation, slowing growth, and political uncertainty, the IMF’s message was clear cooperation between Washington and Beijing remains essential for maintaining global financial stability. Pazarbasioglu’s remarks reflected a cautious optimism that despite geopolitical rivalries, the two powers continue to recognize their shared stake in ensuring a more transparent and resilient international debt architecture.