The IMF: Once the solution, now part of the problem

Misunderstanding EM debt

The International Monetary Fund's current leadership is showing an increasing degree of arbitrariness in its lending decisions and displaying a serious misunderstanding of the emerging market debt market (and finance in general), harming EM economies’ financing costs and long-term wellbeing.

Ever since Covid-19 shook the world, the IMF has overtly encouraged sovereign governments to default on their debt, seemingly for humanitarian reasons. It sympathised with Ecuador's sovereign debt default in 2020, which Ecuador's debt metrics did not justify. Then the IMF and World Bank launched the Debt Service Suspension Initiative in 2020 and the Common Framework in 2021 to enable emerging sovereigns to restructure debt efficiently. Most recently, IMF managing director Kristalina Georgieva declared 25% of EM countries debt to be near or in debt distress. IMF urges UK government ...